September 20, 2011
 

US high corn prices may affect its market share

 

 

US corn prices are too costly and run the risk forfeiting its market share for the world's largest supplier whereas corn output may exceed expectation in spite of pessimistic forecasts, according to Hamburg-based oilseeds analysts Oil World Monday (Sep 19).

 

These factors are bearish in the near-term for soy prices, Thomas Mielke, head of global oilseeds at Oil World, said.

 

"Prices of soy and soymeal have peaked for the time being," said Mielke. "I expect in the near-term, bearish factors will dominate, first in the futures market, but also spilling over into the cash markets."

 

"The bullish factors that are known at the moment, are discounted in the prices," he added. "It could last until September/December this year."

 

Strong demand from developing Asian countries such as China, the world's second-largest corn consumer, coupled with the hottest summer in over half a century in the US, has pushed CBOT corn futures to record highs recently.

 

"US corn prices have become too high, relative to other origins and there is a risk that the US is losing export market shares," Mielke said. "US yields of corn, probably also of soy but too early to say, may turn out slightly above expectations."

 

November soy was down 0.5% to US$13.48 a bushel at 0547 GMT.

 

Although the ongoing economic and debt uncertainty in the US and Europe is another reason to be cautious on soy in the near-term, Mielke said there was scope for upside in the medium-term.

 

"The downward potential is clearly limited, as long as global stocks of agricultural commodities have not been raised sufficiently," he said, adding that global soy production is likely to shrink by about five million tonnes for 2011/2012.

 

Global 2011/12 soy poduction is forecast to reach about 265 million tonnes, Oil World said in June.
 

"Limiting factors are land, water and logistics," Mielke said. "A breakthrough in yields is required, or alternatively we have to expand land. We cannot promote other uses like biofuels and at the same time, stop expansion of agricultural land."

 

Mielke sees global soy production at 140 million tonnes for 2011/2012.