By Joanna Levin
SOYA oil has continued its precipitous fall this week, dragging soyabeans down in its wake. It looks like the year-long bull run is over.
The Chicago July soya oil futures contract closed on Friday, 22 May, at 27.33, down 92 points on the week. The soya oil market has been depressed by falls in Malaysian palm oil prices and recent reports indicating oversupply. On Monday, the national estimate of monthly stocks was revised upwards by 84 million lbs to 1.405 billion lbs, and this has turned sentiment bearish.
Beans closed on Friday at their lowest point in five weeks, with the July contract down 6¢at $6.3525/bushel. In addition to poor oil prices, which will discourage bean crushing, traders are reacting to the ideal planting conditions for soyabeans in the midwest.
US farmers have completed 38% of their planting already, compared with a five-year average of only 23%. Early crop growth also looks extremely healthy, with 9% of the crop already emerged.
The bumper bean crop expected for this year will come on top of high carry-over stocks from last year. Many analysts report that only severe weather conditions could cause this oversupplied market to rally from here.