By Joanna Newman
US soya bean prices have plummeted in reaction to this weeks annual production report and quarterly stocks report.
Together they paint a grim picture of overproduction and burdensome inventories.
The USA produced its largest soya bean crop on record last year harvesting 2.76 billion bushels, up from the 1997 record output of 2.69 billion bushels.
Consumption could not keep pace and stocks of soya beans climbed 9% year-on-year to 2.19 billion bushels as at 1 December, 1998.
The Chicago March soya bean futures contract has fallen to its lowest level since early September at 533.75¢/bushel, down 4% from last week.
This has been a week of bad news for American farmers. On top of the disappointing USDA statistics, US producers now have to contend with a devalued Brazilian Real.
This will improve the export competitiveness of Brazils fast-ripening soya bean crop.
Unless Brazilian farmers suffer a drought in February they will add heavily to the global supply of soya beans, which will continue to depress world prices.
Recent weather conditions in the southern hemisphere have been favourable for soya beans.