June 13, 2007

Drop in US soybean harvest may pull down 2007/08 world soybean output

Hamburg-based oilseeds analysts Oil World said global 2007/08 soybean crop may fall by 6.5 million tonnes on the season to 228.50 million tonnes due to a projected reduction of US soybean harvest.

US soybean harvest is seen to plummet 77.60 million tonnes from 86.77 million tonnes in 2006/07 as majority of American farmers switch to corn for bioethanol production, it said.

Oil World said bioethanol in the US is soaring faster than expected due to excellent profitability and the expansion of biofuel production capacities which surpassed government targets. 

Though South American soybean crops are seen to hit record highs this year, it will not be enough to compensate for the lower US output, the agency said. Brazil's 2007/08 crop is currently forecast at 61.50 million tonnes from 59.0 million tonnes in 2006/07 and Argentina's at 47.00 million tonnes from 46.20 million tonnes.

Oil World concluded South America's projected increase in soybeans, corn, sunflowerseed and oil are not sufficient to fill the world demand.

Falling soybean harvests will support prices as it expects soybean prices to average US$352 a tonne in July 2007 to June 2008, up 17 percent on the season.