March 13, 2012
Global soy prices to rise due to lower output
As Brazil and Argentina soy production decline, global oilseed production for 2011-12 is expected to drop 6.7 million tonnes from last month's projection, to 445.7 million tonnes, according to latest USDA WASDE report.
This drop in soy production is expected to lift the price of commodity up in the global as well as Indian markets on account of high demand especially from Asian and European nations.
The production fall of soy in Brazil and Argentina is due to the hot dry conditions. In Brazil, production is forecast at 68.5 million tonnes down 3.5 million tonnes, and in Argentina production is reduced 1.5 million tonnes to 46.5 million tonnes.
The global soy production is expected to be around 258.9 million tonnes for 2011/12. Meanwhile, global oilseed trade for 2011/12 is projected at 108.4 million tonnes down 2.1 million mainly reflecting reduced soy trade.
Soy imports are reduced for China, EU-27, Indonesia, Japan, South Korea, and Taiwan. Meanwhile, India's soy output in 2011/2 is likely to rise 10.5% to 10.5 million tonnes as farmers plant a larger area with the crop and rains are adequate boosted the production. Also, the high demand for oilmeal has also boosted the production of soy as well as the price of the commodity in the domestic market.
India is the major export of oilmeal to South East Asian countries.
During the period exports rose to 505,506 tonnes from 482,919 tonnes in the year ago period. Oilmeal exports rose 9% to 4.89 million tonnes during the fiscal 12 till February compared to 4.49 million tonnes same period last year according to Solvent Extractors Association of India (SEA).
In India's National Commodity and Derivative Exchange (NCDEX), soy for March delivery traded down 1.43% to INR2757 (US$55.15) on 12th February at 14:10 IST. While in Inter Continental Exchange (ICE), soy for March delivery traded at 1331 6/8 cents per lb on March 9.