July 26, 2011

 

CBOT spot soy to remain unchanged from 2010 by year end

 

 

Forecast of end-year CBOT soy prices have been raised by analysts since January and they now expect the market ending 2011 to be nearly unchanged from 2010, according to a Reuters Poll.

 

A survey of 12 traders and analysts showed spot CBOT soy prices <Sc1> ending the year at US$13.92 per bushel, up 5% from the average forecast among analysts polled at the beginning of the year.

 

The figure is less than two cents below the closing 2010 spot soy price of US$13.93-3/4.

 

The latest estimates ranged from US$12.90 a bushel to US$14.98. Spot CBOT soy futures settled Friday (Jul 22) at US$13.80-1/4.

 

Tight US soy inventories and concerns about prospects for the 2011 harvest were seen keeping a floor under prices.

 

The USDA has projected an on-year drop in US 2011/12 soy production and ending stocks, due in part to lower US plantings. USDA's figures indicate a stocks-to-use ratio for soy in 2011/12 at 5.4%, down from 6% in 2010/11.

 

There were market concerns about hot weather in the Midwest this month and the possibility of more stress in August, the key month for soy development.

 

However, other analysts see that large crops from South America may ease US soy shortages and provide competition for export business.

 

Brazil's 2010/11 soy harvest reached a record 75.04 million tonnes, according to Conab, the Brazilian government's agricultural agency.

 

Good crops out of Brazil are adding competition, said Jerry Gidel of North America Risk Management Services.

 

Analysts are keeping their eyes on China, the world's top soy buyer. China's demand for soy has driven US soy exports to a projected record high of 1.52 million bushels in 2010/11.

 

Both corn and soy prices have potential to go considerably higher if Chinese growth stays on track, said Bryce Knorr, senior editor of Farm Futures Magazine.

 

"However, it may take time for that demand to develop, especially because China has shown the ability to be patient and buy only at lower price levels, "Knorr said.