US may face soy shortage this year

Strong foreign demand and supply shortfall from South America may result to soy shortage in the US this year, Hamburg-based oilseeds analysts Oil World said on Tuesday (May 26).

Drought has pulled down soy harvests of major exporters Brazil, Argentina, Paraguay, Bolivia and Uruguay to a combined 96.70 million tonnes in early 2009, down by 18.1 million tonnes on their combined crops last year.

In its weekly report, Oil World said "the crop shortfall in South America is having severe repercussions on the US market," The magnitude of crop damage has reached dimensions which cannot remain without hefty price reactions, it added.

US soy export sales are up 14 percent on the year and Oil World said there was talk of "overselling" as buffer stocks in the key soy exporting country are dwindling and are at risk of running out before the new crop arrives in autumn.

According to the US Department of Agriculture the 2009-10 soy crop is projected at around 3.20 billion bushels, against an estimated crop of 2.96 billion bushels in 2008-09.

The global supply outlook for soyoil has also deteriorated in recent weeks after the large soy crop losses in South America, Oil World said, adding this was leading to a strengthening of soy oil prices compared to sunflower oil.

Oil World said sunflower oil export prices in Argentina had regained parity with soyoil. Sunflower oil exports are seen gaining market share from soyoil in the near term.