September 7, 2009

Soymeal prices may plunge as much as US$100 a tonne in the second half of the 2009-10 season, as output expands faster than demand, said Oil World, a global provider of information on oilseeds.

Production of soy in South America, home of the world's second- and third-largest exporters, might expand by 27 million tonnes in March to August from the same period in the previous year as El Nino weather conditions brought more rain there, Oil World Executive Director Thomas Mielke said.

Soymeal demand was likely to be too small to absorb the soymeal production in the second half, and meal prices should get under considerable pressure, down by US$80 to US$100 from current levels Mielke said.

Soymeal futures have fallen 8.2 percent this quarter on expectation of favourable weather in the US. Meal for December delivery fell two percent to US$281.10 per short tonne (2,000 pounds) on the CBOT on Sept 4.

The decline in prices would not extend to soy oil, because vegetable oil production would probably be curbed in Asia because of El Nino, Mielke said.

El Nino, characterised by warming Pacific Ocean currents, can bring drought to parts of Asia.