By Joanna Newman
THE volatile soya bean futures market has dropped as much as 8% in the past week, in response to some timely rainfall.
The soya bean crop is essentially “made” in the month of August. Extremely hot, dry weather in July and early August had raised fears of drought damage.
But the recent precipitation will have a significant positive impact on crop yields, especially in the eastern cornbelt.
The much-needed wetter weather caused the Chicago September futures contract to fall sharply to 456.5¢/bushel (£167/t)on Monday, 16 August, down from about 487¢ just under a week ago.
The latest USDA Supply and Demand report was largely in line with expectations.
The government adjusted down its 1999 crop yield estimate to 39.2 bushels/acre (2.64t/ha), from its previous forecast of 40.0 bushels/acre, and changed its ending stocks estimate to 540 million bushels (14.7m tonnes) from an earlier prediction of 590 million bushels.
Despite the downward revision, this is still a record high inventory level and the oversupply will weigh heavily on prices.
US farmers were encouraged to plant even more soya beans this year (a record 74.1 million acres versus 72.4 million in 1998) because of the distortions of the federal subsidy programmes under the Freedom to Farm Act.
The resulting low market prices are igniting a renewed debate on the governments agricultural policy.