Some hope for US soya as Brazilian Real steadies

By Joanna Newman

AFTER weeks of bad news for US soya bean farmers that brought prices to their lowest levels in over a decade, there has been ray of light in the market.

Over the past couple of days, the tumbling Brazilian currency has stopped devaluing against the US dollar and appears to be stabilising. The US soya bean market has seized on the news, amid hopes that this will narrow the gap between cheap Brazilian soya bean exports and the uncompetitive US offerings on the world market.

The Chicago soya-bean futures contract gained 4.75¢/bushel on Tuesday (3 February) to 513.25¢/bushel, but was still down from 514.0¢ a week ago and around 550¢ at the start of the year.

The recent turnaround is fragile. Brazil is still on course to reap an excellent harvest this spring, thanks to ample rain. Both Brazil and Argentina are forecast to have more rain in coming days.

This comes on top of high US stocks following last years record 2.76 billion-bushel harvest in the northern hemisphere.

Domestic consumption remains disappointing. Soya-bean crush activity is slow at around 30 million bushels/week, doubtless due to the unattractive margins for soya products.

The 5% shrinkage in the number of cattle in feedlots, announced last week, points to a drop in feed consumption. Soya oil prices are under pressure from weakness in global vegoil markets.