Global soy, corn prices may fall July-December

Bearish fundamentals are likely to depress global soy and corn prices in the second half of the year, a senior industry analyst said Wednesday (June 16).

 

Asian countries such as China, Japan and South Korea are among the world's largest buyers of corn and soy, and a fall in prices will present a good opportunity for them to lock in their puranchases.

 

Soy prices are likely to average around US$9.00 a bushel in the July-September period, and US$8.75/bushel in the fourth quarter, Rabobank International Assistant Manager Oscar Tjakra told a grains seminar held by the American Soybean Association International Marketing in Singapore.

 

With around 53% of the South American soy crop yet to be sold, and US planting conditions favourable, the outlook shows a large buildup in global soy stocks for the season ending September 30 and in US stocks in 2010-2011, Tjakra said.

 

"The current US new crop supply scenario, combined with record South American production, should see prices trend lower into the US harvest period," while stronger competition among soy exporters may increase the pressure on prices, he said.

 

Stronger competition among soy exporters may increase the pressure on prices, he said. 

 

The July soy futures contract on the Chicago Board of Trade settled 2 cents, or 0.2%, lower Tuesday (June 15) at US$9.49 1/2 a bushel while November soy ended 3/4 cent, or 0.08%, lower at US$9.15 1/2.

 

The risk of adverse weather remains, but if favourable conditions persist, prices may decline from late July.

 

Soymeal prices are also likely to come under pressure.

 

India and South America have large carryover stocks which are likely to compress cash premiums over CBOT soymeal, a Bangkok-based feed miller said.

 

Feedmills in Thailand have already covered 90% of their soymeal requirements until September, and are in no hurry to make purchases for the October-December period, he said.

 

Tjakra said corn prices may fall towards US$3.20/bushel ahead of the US harvest in September and October.

 

With consumers aggressively buying any dip in prices below US$3.60/bushel, and non-commercial funds also buying on downward moves, a fall to US$3.20/bushel would present a good buying opportunity because higher demand will support prices next year, Tjakra said.

 

Global corn stocks at the end of growing season are likely to rise from a year earlier, Tjakra said.

 

Prices are likely to average around US$3.70/bushel in the third quarter and US$4.00/bushel in the fourth, he said.

 

CBOT July corn futures were unchanged Tuesday (June 15), settling at US$3.53 3/4/bushel. December corn was also unchanged at US$3.75/bushel.

 

The current favourable crop conditions and expectations of higher yields in the US are bearish for prices, but fresh demand from China and high corn usage to make ethanol in the US are supportive, Tjakra said.