December 1, 2010

CBOT soy prices underpinned by South American Weather

CBOT soy prices will be underpinned as unfavourable weather in South America may curb production and the use of oilseeds outpaced expectations, media analysts said.

Rainfall in Argentina has been significantly below normal this month and a La Nina weather system, which usually signifies drier-than-normal conditions, increases production risks, media analysts said. The amount of soy crushed into soyoil and soymeal in the US, Argentina, and Brazil totalled 34.9 million tonnes in September and October, 33% more than last year, they said.

"Market participants are aware of the high dependence on South American supplies of oilseeds and grains in 2011," an analyst said. "Thus, price dips may occur temporarily as long as weather conditions jeopardise the crops in South America."

Soymeal exports from Argentina in October totalled 2.6 million tonnes and Brazil shipped 1.2 million tonnes, an increase of 40% from a year earlier, media analysts said. The EU bought 4.75 million tonnes in September and October, up from 3.61 million tonnes a year earlier, the company said.

Indonesia, Iran, Japan, Thailand, and Vietnam also increased purchases. The high prices of grains, reduced availability of rapemeal and fishmeal, increasing livestock herds, and aquacultural production have boosted demand, media analysts said.

Rapeseed crushings in the EU from July through September increased by 200,000 tonnes compared with the previous year, analysts said. It is not sustainable because lower domestic output will require crushings to fall by as much as 1 million tonnes in the year that started on July 1, they said.

EU countries also bought 30.9 million tonnes of oils and fats in the marketing year that ended on September 30, up about 3% from the previous year, media analysts said. Palm oil imports rose by 2% to a record of 5.95 million tonnes, they said.