Americas face worst soya glut for years

By Joanna Newman

THE Americas are swamped with soya beans and analysts report that they have never seen the market look worse in several decades.

According to the Grains Council, US farmers intend to plant a new record 74.2 million acres of soya beans to produce a 2.92 billion bushel crop in 1999/2000. This follows last years record soya bean production.

Given the severe oversupply in the region, there is little logic behind the extra bean acres except the market distortions of federal subsidy programmes and poor margins for other grains.

In the southern hemisphere, favourable weather over recent months has guaranteed a bumper soya bean harvest for Brazil and Argentina, both major exporters.

US producers are nervously watching the Brazilian currency for signs of further volatility.If the Brazilian Real depreciates further, this will enhance the countrys export competitiveness at the expense of the USA.

Prices have dropped to twelve-year lows with no end in sight. The Chicago March futures contract closed on Tuesday (9 February) at 499.0¢/bushel, down from 513.3¢ a week ago and down 17% from December.

On the demand side, not enough beans are being crushed to make inroads into the oversupply. Last week, 31 million bushels of soya beans were crushed for oil, down by 2.5 million from a year ago.