June 16, 2010

Oil World forecasts a rise in August soy stock

 

Oilseeds analyst Oil World on Tuesday (June 15) raised its forecast of global end-August 2010 soy stocks by 1 million tonnes, mostly because South American soy crops this year are larger than expected.

"In March/August 2010, world production will far exceed consumption, resulting in a substantial increase in world soy stocks to 71.3 million tonnes," the research firm said.

"This is up 1 million tonnes from our previous estimate and a staggering 26 million tonnes above end-August 2009," it added.

The large volume of stocks is likely to depress prices in the coming 12 months to end-June 2011, the firm said.

World soy harvests in the current 2009/10 season are likely to reach 260.7 million tonnes, up from 211.3 million tonnes in 2008/09, it forecasted.

"The higher-than-expected soy production in South America in February/May 2010 will raise the excess of world production over demand and result in a further increase in world stocks of soy as of end-August 2010, the start of the world crop season 2010/11," it said.

Oil World raised its estimate of Argentina's 2009/10 soy crop harvested in early 2010 to 55.0 million tonnes, up by 0.7 million from its previous estimate in early June and up sharply from last year's drought-reduced crop of 31.5 million tonnes.

Brazil's soy crop is likely to rise to 68.7 million tonnes from 57.2 million and Paraguay's to 7.5 million tonnes from 4.2 million, it said.

Although the research firm expects the forthcoming global 2010/11 crop to fall to 254.1 million tonnes, the large season-ending stocks are likely to depress world soy prices in the new season, it said.

"We consider it likely that average soy prices in July/June 2010/11 will be about US$40-50 (a tonne) below current levels," Oil World said.