By Joanna Newman

FINALLY some light at the end of the tunnel for the beleaguered US soya bean market as domestic inventory levels may not be as high as previously feared, according to the latest USDA Supply & Demand estimates.

Ending stocks for the 1998/99 season are now pegged at 395 million bushels, a 35 million bushel reduction from last months tally, while the ending stockpile for the 1999/00 season is projected at 590 million bushels, a 5 million cut.

The market reacted positively to the government figures and also took heart from some hotter weather, which could cut back acreage yields.

On the export side, there are encouraging signs that China may be interested in buying from the US instead of South America.

The Chicago July soya bean contract closed on Monday, 12 July, at 424.0 cents/bushel, up from 413.8 cents just under a week ago.

Nevertheless, there is little to be happy about in the soya bean market. Stock levels are still at record highs despite the latest fine-tuning.

The much-maligned Freedom to Farm Act has had the perverse effect of encouraging farmers to plant record large soya bean acreage this year, despite a world glut and the lowest prices since the 1970s.

Farmers stand to receive federal Loan Deficiency Payment (LDP) subsidies, up to a ceiling of $75,000 each.

But unlike previous farm programmes they will still be responsible for selling their subsidised soya beans onto the open market at harvest time, which will add to supply and pricing pressure.

Some producers who fear losing money on soya beans over and above the $75,000 ceiling may start selling early to beat any possible further market declines.

Many analysts are gloomily predicting soya beans to fall well below 400 cents/bushel this year.