February 28, 2012
On the back of strong demand and supply concerns due to dry weather, Asian soy and soymeal prices will likely to rise above US$13/bushel in the first half of March, trade participants said.
If soy prices breach the US$12.90/bushel level, they may even touch US$13.20, said Kaname Gokon, the Tokyo-based deputy general manager at Okato Shoji Co. Strong demand from China and tight inventories are positive for prices, he said.
CBOT near-month soy is trading around US$12.78/bushel, just off Friday's settlement at US$12.79.
Global soy output will likely fall 7.6% in the 2011-12 aggregate marketing year to 246.5 million tonnes due weaker South American output amid dry weather, according to the International Grain Council.
Demand for US soy will likely exceed earlier expectations because of the shrinking South American crop, said a Singapore-based executive with a global commodity trading company.
The USDA has forecast a sharp rise in the country's corn acreage but it hasn't changed its forecast for area under soy, said another trader in Singapore. But this may change in April-May if soy prices rise over the next month, which would encourage farmers to boost soy acreage he said.
November soy on CBOT, which represent the next US harvest, is trading around 2.3 times the December corn price. The multiple should rise to 2.5 to push growers to plant soy instead of corn, traders said.
Short term flows of institutional funds continue to build in soy and soymeal, ANZ Banking Group said in a note. Net speculative positions in soy have moved from "oversold" in the last quarter to a more neutral position, it said.
In the cash market, East Asian buyers are locking in supplies of Indian soymeal, which is available at a discount of up to US$15/tonne, on a delivered basis, to the South American crop.
Proconco, a Vietnamese animal feed miller, last week purchased three cargoes totalling 40,000 tonnes of Indian soymeal for March shipment at US$411-415/tonne, cost and freight, trading executives said.
However, supply from India is limited, and Proconco also purchased 14,000 tonnes of Argentinean soymeal, around US$425/tonne, C&F, for February 15-March 15 shipment.