August 12, 2009

US soy is the premier choice for importers worldwide this summer as prices dip below main competitor Brazil ahead of an expected record crop this year in the US.

 

With Argentina, the world's third soy exporter, out of the market due a drought decimating the crop, some importers switched their purchases to the US from Brazil, where prices have been rising.

 

Jack Scoville, vice president at Price Futures Group in Chicago said, beans in the US were cheaper than anywhere else. That was enough to take care of any freight difference with Brazil.

 

Export premiums for US soy for shipment in September from the Gulf of Mexico were being offered between US$2.10 and US$2.20 per bushel over the CBOT November soy futures contract. That means a cash price for US soy of between US$12.41 and US$12.51 per bushel.

 

Soy from Brazil was being offered for shipment in September from the main grain port of Paranagua at US$2.10 per bushel over the CBOT September contract, which is about US$12.98 per bushel.

 

China, the world's top soy buyer, has booked another 110,000 tonnes of US soy for delivery during the new marketing year that starts September 1, said the USDA on Tuesday (Aug 11).

 

The USDA, in its August crop report on Wednesday is expected to restate its forecast for a record soy crop in the US this year.

 

Exceptional dry weather throughout the growing season in South America left the size of the soy crops from Argentina and Brazil well below expectations, forcing some buyers to look to the US for supplies.

 

High soy prices caused many South American farmers to book a larger-than-usual amount of sales of their supplies before harvest, leaving them with little to provide to the export market during the past few weeks.

 

Producers had sold what they are going to for the season, the rest of their soy they hold as a way to generate smaller amounts of cash to pay their monthly bills, said a local sales manager at multinational grain trader in Sao Paulo.

 

Light demand for soy from processors around the US Midwest also was helping exports receive a boost.

 

A US grain dealer said the processor demand was usually jacked up enough that the South American soy were what they take, but the processors were not leading the market as they typically did in late July and August.