September 2, 2010

US soy futures fall on signs of sluggish demand

Soy futures fell the most in more than a week on speculation that Chinese and US demand is slowing after prices rose as much as 16% since the end of June.

Soy processors in Heilongjiang, China's top-producing province, are in talks to buy government stockpiles, which may ease demand for imports from the US, the largest grower and exporter. US inventories of soy-based animal feed rose 21% at the end of July from a year earlier, the Census Bureau said last week. Soyoil inventories rose to the highest level since December 2003.

Soy futures for November delivery fell 12.5 cents, or 1.2%, to close at US$10.10 a bushel at 1:15 p.m. on the CBOT, after earlier gaining as much as 0.4%. The decline was the biggest since August 19. Prices rose 0.5% in August, reaching a seven-month high of US$10.49 on August 5, as Chinese imports surged to a record.

Soyoil futures for December delivery fell 0.48 cent, or 1.2%, to close at 40.05 cents a pound in Chicago, the biggest decline since August 19. The vegetable oil fell 1.2% in August, the third decline in four months.

China was expected to increase soy imports by 20% to a record 49.5 million tonnes in the marketing year that ends September 30, up from 41.1 million tonnes a year earlier, USDA said on August 12.

Meanwhile, corn prices fell from a 14-month high on speculation that demand for ethanol will slow, after crude oil plunged 8.9% in August and rain improved prospects for global production of wheat, a competing livestock feed.

Corn futures for December delivery fell 2.25 cents, or 0.5%, to close at US$4.3925 a bushel on the CBOT. The most-active futures, which gained 8% in August, rose yesterday to touch US$4.4525, the highest since June 2009.

The soy crop in the US, the world's largest grower, was valued at US$31.8 billion last year, second only to corn at US$48.6 billion, government figures show.