By Joanna Newman
SOYA bean prices have suffered two weeks of steady losses due to rain in South America, dragging the market down to its lowest level since early October.
At this time of year, the US market is traditionally at the mercy of weather patterns in South America, as newly planted crops in the southern hemisphere start to germinate.
Farmers in Brazil and Argentina are enjoying timely rains and their grain crops have got off to an excellent start. Soya bean acreage in the region is high, too, further adding to global supply.
US producers, saddled with huge unsold stocks from their own record harvest in 1998, fear additional competition for international soya bean tenders in the New Year.
Analysts and traders are even more cautious on beans than maize or wheat. The Chicago January futures contract closed yesterday (17 December) at 548.0¢/bushel, compared with 565.6¢/bushel just over a week ago.
Amid falling prices, US farmers are reluctant to sell their 1998 bean stocks and are keeping their heads above water due to Loan Deficiency Payments (LDPs) from the federal government.
A quarter of the summer crop has been placed in the programme and producers have already received an average of 44¢/bushel, or a total $300 million (£179m). Under the terms of the subsidies, farmers retain ownership of their crop and still have to sell it on the open market.