By Joanna Newman
THE US soyabean market remains gloomy. Prices are expected to continue to inch downwards for months to come, weighed by record stocks at home and high output in the southern hemisphere.
Only a summer drought could impact this chronically oversupplied commodity.
Market analysts are debating the possibility of a La Niña-induced drought in 1999 following last years El Niño.
After all, the USA is now in its eleventh year without a drought, probably the longest stretch on record.
However, nobody is betting on a drought yet in the futures market. The Chicago July futures contract settled on Tuesday (25 May) at 459.8¢/bushel, around 20-year lows.
This compares with 475.7¢ a week ago, a drop of over 3%.
Spring planting is progressing well. 44% of the soyabean crop is in the ground, in line with the average for this time of year.
Although there are sporadic concerns of wet conditions, it is no doubt too early in the season for this to cause significant delays or impact yields come harvest time.
Indeed, the extra moisture has in some instances encouraged producers to switch acreage from maize to soya beans, exacerbating the oversupply.
Meanwhile soya bean demand offers little encouragement. In the latest reporting week, only 26.9 million bushels were crushed for meal, an 11% drop from the previous week.
The slower crush pace could cause a squeeze on meal supplies, especially as meal is expected to be shipped to Russia as a part of the food aid programme .
The crush pace has slowed partly in response to the global oversupply soya bean oil and lower vegetable oil prices worldwide.