Record oversupply holds down US soya

By Joanna Newman

US soya bean prices continue to stagnate at historically low levels, burdened by the worst domestic oversupply on record.

Thanks to favourable weather conditions, spring planting is ahead of schedule with 71% completed, compared with a five-year average of 61%.

The timely planting of a huge number of unneeded acres is adding to market pressure.

With most of the spring acres now in the ground, attention has shifted to weather forecasts for the emerging crop.

Rain over the recent Memorial Day weekend was viewed as positive for beans, while short-term predictions point to further beneficial weather.

This is adding to bearish sentiment in the futures market, as it could spell higher crop yields come harvest time.

The Chicago July futures contract, which has been declining steadily since the start of the year, settled on Tuesday (2 June) at 458.0¢/bushel, off from 459.8¢ a week ago.

Soya beans are now trading down around levels last seen in the 1970s.

Only a drought scare could turn around this commodity. Commentators are trying to assess the likelihood of a hot, dry spell or drought this summer.

The legacy of last years El Niño, coupled with the fact that the USA has not seen a serious drought in over a decade, both raise the spectre of a water shortage in North America in summer 1999.

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