Record US crop means soya over-production

By Joanna Levin

SOYA bean prices have had a roller-coaster ride in recent days. The futures market plummeted early in August on favourable weather conditions, rallied ahead of a key Government crop report on 12 August and then dropped sharply in reaction to the data.

The Chicago September futures contract hit a high of around 569¢/bushel during Tuesday (4 August) and then fell sharply to 535¢ during trading at the start of this week. After the release of bearish production data, the contract closed on 12 August at 535.5¢/bushel, down 7.5¢ from Tuesday.

American farmers will produce a record soya bean crop this year, according to the US Department of Agriculture. The crop is expected to total 2.82 billion bushels, up 4% from last year when farmers harvested a record 2.73bn bushels.

Much of the overproduction is already reflected in the market price, which has dropped from almost 700¢/bushel in February. Meanwhile thanks to ideal weather conditions the yield is forecast to rise to 39.5 bushels per acre, an increase of 0.5 bushel/acre from 1997.

Many analysts believe this yield estimate is too cautious given the perfect growing weather that farmers are enjoying. Some predict that yields could climb closer to the record 41.4 bushels/acre set in 1994.