September 7, 2009

US soy exporters have sold as much as they can physically ship in the first months of the harvest as global demand gains, according to Oil World.

Oil World executive director Thomas Mielke said US is almost sold out for exports in October and November for soy and soymeal, adding that it is going to be a challenge for the US exporters to satisfy world import demand in a timely manner.

Soy futures have dropped 25 percent from a nine-month high in June on forecasts US production may reach a record. Shipping constraints may pressure domestic prices even as export premiums gain.

Shanghai JC Intelligence Co. chairman Li Qiang said output in China, the world's biggest importer, may drop 15 percent in 2009-2010 on poor weather.

Soy for November delivery closed at US$9.22 a bushel on the Chicago Board of Trade on September 4. The so-called spot-basis bid, or premium, offered for barge shipments before September 15 to the New Orleans area ranges from 90 cents to US$1.20 a bushel above November futures from 45 cents to 85 cents a year earlier, according to US Department of Agriculture (USDA) data.

Mielke said global supply of the 10 major oilseeds is likely to drop by 5 million tonnes in the first half of the 2009-10 season from a year earlier as soy output in China drops.

According to John Baize, president of Falls Church, Virginia-based John C. Baize and Associates, the drop of supply may push the export price of US soy higher as buyers scramble for tight supplies amid limited shipping capacity at US ports.

According to USDA forecast in August, soy accounts for more than half of an estimated global 422.6 million tonne production of major oilseeds.

US exporters have sold about 14 million tonnes of soy as of August 27 for delivery beginning September 1, up 85 percent from a year earlier. Still, buyers such as Mexico, which can import the oilseed by land, may have easier access to supplies, Baize said.

Mielke  said global supply may rise from March to August 2010, as output in South America, including Brazil, the world's second-largest grower and exporter, and Argentina, the third largest, expands by 27 million tonnes from a year earlier.