By Joanna Levin
SOYA bean prices managed a slight recovery at the start of September in reaction to news of the flood damage in China harvest and the rebound in US equities. The Chicago November futures contract settled on Tuesday 1 September at 518.0¢/bushel, up 6.5¢ from the day before.
However, this increase in price is considered to be short-term . Although Chinas output has been hurt by floods, this is not enough to compensate for Americas overproduction and strong harvest outlook, analysts warn. 65% of the soya bean crop is rated good to excellent, 24% fair and only 11% poor to very poor. Exports are likely to be slowed by the turmoil in world financial markets and fears of a global recession and commodity deflation.
This is partly offset by the weak dollar which makes US exports more competitive.
Analysts predict further declines in soya bean prices because in the absence of any fundamental support the grain is more vulnerable to falls in other markets such as wheat, corn and equities.
Soya bean oil is in a downtrend, with the October futures contract closing on Tuesday 1 September at 23.51¢/lb, down 0.18¢ from the previous day and a further 24.5¢/lb in mid-August. The contract has plummeted from 29.5¢/lb in May.