June 25, 2012
Asia soy prices rise on bullish fundamentals and tight supply
Bullish fundamentals is expected to raise Asian soy prices over the next few weeks, while world soy stocks are lowered by high demand and lower output from weather-related supply risks in the US.
Front-month soy futures on the Chicago Board of Trade rose by about 3.8% on week, with CBOT July soy settling at US$14.38 1/2 a bushel Thursday (June 21), down 8 cents on the day as investors booked profits after gains in recent sessions.
The old crop stocks continue to shrink as South American soy supplies are being drawn down and demand is shifting to the US for both exports and crushing, Rabobank said in its monthly agri-commodities report Friday (June 22).
In South America's major soy producing regions, strong cash prices continue to prompt farmers to sell their crop, it said. As a result, 89% of the 2011-12 Brazil soy harvest has been sold against the usual 70% by this time, and 29% of the 2012-13 crop has been sold against the usual zero sales at this time.
However, the US soy crop will be a key determinant in the coming month, which could push CBOT prices above the US$15/bushel level if the current dry weather pattern continues, Rabobank said.
For US soy as of Sunday (June 17), 56% of the crop was rated good to excellent, down from 60% the prior week and 68% a year earlier, the US Department of Agriculture said in its weekly crop progress report Monday (June 18).
If the hot and dry weather continues, the crop may see more deterioration and yields might be much lower, said a Tokyo-based trader.
Investors will be watching for the USDA's National Agricultural Statistics Service survey, the results of which will be available from June 29, to get fresh clues on the soy crop's progress and acreage.
On the demand side, soy imports by China will likely remain strong, underpinning prices, said a Singapore-based trader.
In the first five months of this year, imports by China, the world's biggest importer of soy, totalled 23.43 million tonnes, up 20.7% from the same period a year earlier, China's General Administration of Customs said Thursday.
The market will likely brush off negative sentiment this week from economic reports in China, Europe and the US pointing to a weakening economic outlook and focus on fundamentals for the time being, said a second Singapore-based trader.