September 13, 2010

 

US soy exports face threats from South America

 

 

Strong competition from South America will prevent US soy exports scoring a fresh record this year, despite a bumper American crop and soaring demand from China.

 

US soy crop will hit an all-time high of 94.8 million tonnes (3.48 billion bushels) in 2010-11, 1.4 million tonnes (50 million bushels) higher than previously expected, the USDA said in its latest monthly global crop supply and demand report.

 

The figure will be supported by a record yield of 44.7 bushels per acre, the report said, surprising analysts who had expected small falls in both production and yield estimates.

 

"Hot, humid conditions prevailed throughout much of the major soy-producing areas mid-month, maintaining a rapid pod-setting pace" in many areas, with "timely late-month rainfall" helping pod-filling in parts of the Corn Belt, the USDA said.

 

On the demand side, the forecast for foreign purchases by China, the top importer, was also raised, by 3.0 million tonnes to 55.0 miliion tonnes - also a record.

 

USDA noted that the continued strong US sales to China reflect robust crush activity stimulated by rising demand for vegetable oil and protein feeds. Meanwhile, sales to Egypt too have "dramatically grown", boosted by its burgeoning crushing sector and demand for soymeal.

 

However, the record pace of US sales is not currently expected to translate to record export volumes in the coming year, given projected large crops in South America, the USDA said.

 

Harvests in Argentina and Brazil - while lower than last year's, when they were blessed by plentiful El Nino rains - are, at 50.0 million tonnes and 65.0 million tonnes respectively, expected to come in well ahead of historical levels.

 

The data were viewed as likely to undermine Chicago soy prices, with US Commodities saying they would provide some pressure to the market.

 

Rabobank analysts termed the report "bearish" for soy, adding that the upward revision in the yield estimate was "counterintuitive" given the decline of the condition of the US crop, in weekly ratings data.

 

Soy for September stood 0.9% lower at US$10.28 a bushel in Chicago at 16:30 GMT, with the November lot losing the same percentage to US$10.36 a bushel.