By Joanna Newman

THE US soya bean market is still sky-high despite futures values bouncing slightly in the past week.

The Chicago May futures contract settled on Tuesday (16 March), at 482.75¢/bushel, its highest close since mid-February.

Traders may have been reacting to news that rain is delaying the Brazilian harvest.

But the weather-related glitch will have little impact in the long term and South America will soon add a record soya bean crop to the already swollen inventories in North America.

US carry-over stocks will double to 410 million bushels at the end of the 1998-99 season and climb to 565 million bushels in 1999-2000, according to the US Department of Agriculture.

Meanwhile, this years devaluation of the Brazilian real has enhanced the countrys export competitiveness at the expense of the USA.

Despite oversupply and low prices, US bean acreage is about to increase. Distorted federal subsidy programmes such as Loan Deficiency Payments will encourage US farmers to plant more soya beans in place of maize or cotton this spring.

Faced with this anomaly, there are conflicting rumours that Congress will move swiftly to amend farm programmes this year. This could have a major impact on the soya bean market.

The market will pay close attention to the planting intentions and inventory reports, both to be released by the USDA at the end of March.

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