Low prices rule in US soya-bean market

By Joanna Newman

US soya bean prices are stagnating at extremely low levels, in the absence of any market news or weather patterns that could help change sentiment.

The Chicago July futures contract closed on Tuesday (22 June), at 467.8¢/bushel, little changed from last week.

Most of the record-large acreage has now been planted with 94% in the ground. This compares with a five-year average of 88% for the time of year.

The USA is already burdened with its largest-ever soya-bean inventory and all attention is now on the weather, in an effort to gauge likely yields come harvest-time.

So far, meteorological conditions have been benign for US soya-bean farmers and the newly planted crop is off to a healthy start.

The federal subsidies under the Loan Deficiency Payment (LDP) programme are currently distorting the market in two ways.

Not only has the programme encouraged US producers to plant more bean acres in 1999 in the face of a global glut.

It is also understandably making farmers less eager to sell their inventories, because they are effectively cushioned from the low market prices.

While slow producer selling is lending short-term support to soya bean prices, it means that there is an overhang of unsold stock which will depress the soya bean market in the coming months.

Meanwhile there is little joy for the soya bean crushers. Crushing activity has slowed in the face of the lowest soya oil values in years, caused by extremely competitive pricing of south-east Asian vegoil products.