June 18, 2008

Skyrocketing corn prices to push soy higher

The historical highs of corn prices will likely drive the prices of soy and other oilseeds upward in the medium term, Hamburg-based oilseeds analysts Oil World said Tuesday (June 17, 2008).

The tightening of the US and world balances of corn in 2008-09 will have a bullish impact on soy and products and will spill over to other oilseeds, Oil World said.

Corn prices hit another record high on Monday (June 16, 2008) and are expected to climb further due to flooding in the US Corn belt.

With corn prices expected to stay high following the US crop damage, South American farmers are likely to plant more corn instead of soy in October/November 2008, the report indicates.

The fight for acres will intensify in 2009 and soy is running the risk of considerably losing acreage in the spring of 2009 in the US, unless soybean prices follow corn higher, Oil World added.

However, the overall impact of US flooding on soy is still difficult to assess.

Midwest soy plantings were also likely to have suffered from the heavy rain and flooding, but some US farmers could expand soy plantings to replace damaged corn.