By Joanna Newman
ONCE again US soya bean prices are at the mercy of South American weather patterns.
Futures values in Chicago have dropped sharply in recent days on reports that Brazil and Argentina will enjoy some much-needed rain this week. The Chicago January soya bean futures contract settled on Wednesday (9 December) at 565.6¢/bushel, substantially lower than the 581.0¢/bushel level a week ago.
Last week saw rumours that planting conditions in the Southern Hemisphere were too dry and farmers were even replanting fields that had failed to germinate.
Now it appears this is not the case and the bean crops in Brazil and Argentina are unlikely to have suffered any lasting damage. This means increased supply of South American soya beans in the spring, on top of the largest-ever US harvest, analysts warn.
Prices will still remain volatile for a few weeks at least. The lack of reliable meteorological and crop progress data for South America leaves the US market vulnerable to rumours at this point in the season.
Meanwhile US production and export data are due for release at the end of this week but are not expected to hold any surprises. Lower prices are helping to make US beans more competitive on the international market but high domestic inventories will take a long time to shift, say market analysts.