May 16, 2012


Oil World says global soy prices to stay well supported



The decline in soy prices in the past days is premature and tight supply fundamentals may keep prices well supported in coming months, Oil World said on Tuesday (May 15).


"We see only limited downward potential for soy prices in the near to medium term," Oil World said.


US soy futures fell to six-week lows on Monday, dragged down by continued selling of long positions by funds and by concerns over the strength of the global economy.


The fall from highs reached on May 2 is "premature and mainly based on technical factors rather than fundamentals," Oil World said.


Global soy harvests in the current 2011-12 season will fall to 116.07 million tonnes from 137.68 million tonnes in 2010-11, it said. This is likely to be caused by expected poor crops in Argentina and Brazil.


"With South American supplies significantly reduced as of end-August 2012, there will be a run on US export supplies - soy, soymeal and oil - for shipment in September 2012-February 2013," it said.


Near-record soymeal prices will also be required to ration available soymeal supplies, it added.


"Vegetable oil prices are seen appreciating in the near to medium term owing to insufficient world soy supplies in the next few months, the prospective palm oil deficit in Malaysia...and insufficient world supplies of rapeseed and rapeseed oils," it added.