April 11, 2007

Deficit in global soybean supply expected
 

Hamburg-based oilseeds analyst Oil World said a global soybean supply shortfall may take place in 2007/2008 with Brazil and Argentina will not be able to compensate for lost stocks as US farmers surge for corn plantation for ethanol.

In its report, Oil World said a shortage of six to ten million tonnes of soybean next season is very likely as South America cannot offset the prospective massive decline in the US soybean production while world soybean crushings will continue to increase.

Tight new crop fundamentals would dominate soybean prices in the coming months, with soy markets likely to rise sharply on news of crop problems, it said.

The firm said world supplies will be higher than expected previously, mainly due to the much better South American production.

"In Brazil many observers have raised their crop estimate to 59 to 60 million tonnes against 56.9 million tonnes last year. There is some uncertainty however in Argentina, as it is still unclear how much damage was done from the very heavy rainfall over an area of 3 to 4 million hectares at the end of March," it said.

Oil World currently estimates Argentina's soybean crop this year at 45.3 million tonnes from 40.9 million last year.

For world soybean stocks, Oil World has raised estimate to 66.3 million tonnes as of end August 2007, up sharply by 6.3 million tonnes from yearago.