November 17, 2010

Oil World predicts soy prices to further fall

Prices for soy, soyoil and soymeal are vulnerable to further price falls, but tight global oilseed supplies could limit the scale of any drop, Oil World announced Tuesday (Nov 16).

"There is a high risk in our opinion for a price setback, driven by profit-taking and speculative selling in the futures market worldwide," it said.

CBOT soy fell more than 5% Friday (Nov 16), their biggest plunge in over a year, as talk that China might raise interest rates sparked a broad commodity sell-off.

US soy futures had only on November 9 reached a 26-month high after the USDA made a surprise cut in its estimate of the US soy harvest.

"Although we expect a price setback in the near term, the downward scope is limited by the global deficit of (oilseed) production relative to demand," it said.

An expected reduction in global oilseed stocks the tighter supplies may cause could also provide background support to prices.

"With US grain and oilseed production lower than expected, the world market will become increasingly dependent on South American supplies from February or March 2011 onward," it said.

Weather in leading producers Brazil and Argentina will be keenly watched by the global oilseeds market in coming weeks.

"Some good rainfall has occurred in southern Argentina and in several pats of Brazil lately. Although several soybean growing areas received less than normal rainfall during the last three weeks, the current situation is not yet critical," it said.