US soy prices slump as China imports dry up
Soy prices are poised for a tumble, as China's imports of the oilseed dry up, and South American growers sell more of their record crop.
China, the biggest buyer of soy, may slow its imports from the record pace expected this month and in June, as processors toil to get through existing supplies, Oil World said.
"The sharp increase in soy arrivals in China is likely to lead to a considerable building of stocks, which could result in a slowdown of Chinese purchases," it said.
It expects price declines in soy and soymeal in the next two-to-three months unless weather conditions deteriorate in North America or in other major producing regions.
In the longer term, the market may come under pressure as South American farmers accelerate crop sales, after a stand-off which traders have credited with supporting US prices.
Growers in Brazil, the second biggest soy producer after the US, have sold 57% of their record harvest, compared with a 65% figure a year ago, analysis group Celeres said on Monday (May 24).
"Very large stocks available in the hands of South American farmers will have to move onto the market sooner or later," Oil World said, estimating that Argentine and Brazilian inventories could rise by 19.4 million tonnes in the year to the end of August.
This will result in significant competition for US soy and products in September-to-February 2010-11, creating a bearish scenario for prices.
Meanwhile, soyoil looked likely to prove the most resilient member of the complex, supported by a rise in vegetable oil consumption above production in the April-to-September period.
Furthermore, soyoil had been "priced competitively relative to palm oil in recent weeks, stimulating significant buying interest from India," which is vying with China to be the world's biggest buyer of vegetable oils.
Oil World sees vegetable oil demand rising by 6 million tonnes in 2009-10, 1 million tonnes more than the year before, thanks in the main to consumption by biodiesel plants.
