June 13, 2012

US soy prices seen to stay strong in coming months

Oil World said on Tuesday (June 12) that because of high US exports, soy prices are likely to remain firm in the next five to seven months, but could be pressured later by larger South American crops in 2013 and sluggish global biofuel demand.

"We are likely to see record US soy disposals in September 2012-February 2013, putting logistics to the test and keeping prices well supported," it said.

Oil World forecasts US soy exports will increase by nearly 40% from September 2012-February 2013 to compensate for the drought-hit South American crop this year. But an expected recovery in South America's 2013 soy harvests will start to pressure prices early next year, it said.

"The expected firm price trend of soy within the next five to seven months and the prospective easing of prices afterwards will mainly affect soymeal as the major product and only to a smaller extent soyoil," it said.

But sluggish global biofuel output could also weaken soyoil prices in coming months, it said.

"The forecast slowdown of the growth in global biodiesel production in 2012-13 is expected to pressure prices of oils and fats somewhat," it said.

Brazil's biodiesel output fell in March and April 2012 despite expectations of an increase, it said. This contributed to larger-than-expected Brazilian soyoil exports so far in 2012, it said.