July 2, 2012

US soy prices soar on limited supply

US soy prices soared Friday (June 29) due to fears of tight supplies.

"Soys are going to be the story of the summer," said Sal Gilbertie, president of Teucrium, a publicly traded grain investment fund. "Everybody has worried about corn, with the dry and hot weather. But soy stocks are extremely tight right now."

The USDA said Friday (June 29) that despite an 8% gain in soy stocks in storage, the soy disappearance, or sales, of 707 million bushels for May was the second-largest disappearance on record.

Analysts have worried about soy stocks with the 5% jump in corn acres planted this year, compared with just a 1% increase in soy acres to 76.1 million acres nationally. Iowa's 8.8 million acres is the lowest in the state since 2001.

"Clearly, world demand remains strong, particularly from China," said Dean Coleman of Humboldt, president of the Iowa Soy Association. "We would not be surprised to see exports increased further, which will draw down the stocks more than the USDA is estimating. With the short South American crop and weather concerns for the US, this fall will be tight."

Prices for the old crop July contract for soy soared US$0.50 per bushel to US$15.16 Friday on the Chicago Board of Trade. The new crop November contract was strong as well, rising US$0.24 per bushel to US$14.27.

Corn prices continued their strength after the monthly acres and stocks report, rising another US$0.04 per bushel to US$6.30. Corn has gained more than US$1.25 per bushel in the last week on worries that the dry, hot conditions over most of the Corn Belt will hurt the pollinating crop.

Despite rainfall in Iowa on Friday (June 29), weather is still a concern. Arlan Suderman of Farm Futures Magazine said predictions for continued hot weather into next week "will cause notable losses to pollinating corn in the drier areas," which cover much of Missouri, central/southern Illinois, southern Indiana and eastern Kansas as well as Iowa and Nebraska. Iowa is the nation's largest corn- and soy-producing state.