September 27, 2011
Asian soy prices to fall amid weak economy
Concerns over the weak global economic outlook are likely to exert downward pressure on Asian soy prices for the next few days.
Soy futures on the Chicago Board of Trade extended losses Monday (Sep 26), with the most-active CBOT November contract falling as much as 32 cents to US$12.26 a bushel and have been falling for three weeks and are now at their lowest this year.
A Singapore-based trading executive said, "It isn't about soy alone...investors are selling everything, even gold, which is generally considered a safe haven."
Most traders said there should be fresh buying at current price levels as soy fundamentals are strong.
"It is a herd mentality due to which selling in soy continues unabated," a trader at a Tokyo-based commodities brokerage said.
On Sept. 20, net speculative long positions in US soy futures were down 35% from a week ago, data from the Commodity Futures Trading Commission showed.
Overall speculative longs in the 14 US agricultural markets have fallen sharply but the most dramatic decline is in soy, ANZ Banking Group said in a note.
Net speculative longs for soy reached 24 million tonnes Aug. 30 and over 10 million tonnes of these positions are now liquidated, it said.
Analysts said the ongoing decline in prices indicates that speculators are liquidating again.
The London-based International Grains Council has revised up the global soy production forecast for the year beginning Oct. 1 by two million tonnes to 260 million tonnes, but it is still 3% lower than the record high of 2010-11.
The pressure of harvest will keep prices of oilseeds and vegetable oils on the lower side in the next quarter but a revival is likely early next year, Hamburg-based commodities analyst Thomas Mielke said.
The government's US soy output estimate of around 84 million tonnes is on the lower side and may be revised up as harvesting gathers momentum in the next few months, Roy Bardole, chairman of the US Soybean Export Council, said last week.
In several parts of Iowa, Indiana and Illinois, the crop has benefited immensely from heat and sunshine in August, which increases protein content in beans, he said. These states account for about half of US soy production.