Oil keeps USA soya sliding

By Joanna Levin

ONCE again, oil dominated the soya trading complex in this weeks trading, continuing its precipitous fall which started mid-May.

Soya oil had been one of the best performing agricultural commodities this year, with the July futures contract rallying from 25.00/lb in January to 29.50/lb in mid-May. But the Chicago July futures contract closed yesterday (Monday) at 25.60/lb, down 1.73 on the week.

Analysts attribute the recent sell-off to liquidation by investors, triggered by the weakness in global vegetable oil markets. Soyabeans drifted lower on weakness in the oil market, which has narrowed the margins for crushers.

The market is also under pressure from good weather in the midwest and poor exports. The soyabean crop is reported to be 75% planted, compared with a five-year average of only 57%. Export inspections during the week ended May 28 totalled 5.08 milion bushels, far less than market expectations of up to 8m bushels.

The Chicago July soyabeans contract settled on 1 June at $6.192/bushel, down just over 16 on the week. With the high carry-over stocks from last year and forecasts of a bumper crop this year, many forecasters expect soyabeans to lose another 8-10% in value by November.