By Joanna Newman
AFTER hitting a two-month peak in early October, bean prices have retreated steadily over the past couple of weeks.
The Chicago November soya bean futures contract settled on Tuesday, 20 October at 551.0¢/bushel, down from 563.5¢ a week ago. The main concern is oversupply.
The American soya bean harvest continues apace. Farmers have already harvested 71% of their crop, compared with a five-year average of 64%. Dry weather forecasts suggest that they will be mostly finished by the end of the month and this prospect of added supply is discouraging any price rally.
There is much debate about the size of this years crop. Last month the USDA actually lowered its forecast of US soya bean production to 2.769 billion bushels from a previous 2.909bn, whereas several private analysts have raised their production estimates to over the 2.909bn figure. Either way, this will be the biggest crop in record.
Recent bullish stories about Government intervention have given way to some market scepticism, and this has also helped to drive soya bean prices lower in the past few days. In common with other grains producers, soya bean farmers were excited earlier this month by promises of food aid shipments to Russia which could help shift some of Americas excess grain stocks.
However, there has been no formal request from Russia for US food aid yet.
Meanwhile, the volley of USDA announcements about additional subsidies and programmes to help farmers may prove short-lived. This supportive talk for farmers could well dry up after the November elections, some analysts warn.