Weather dominates US soya business

By Joanna Newman

THE April market for US soya beans is traditionally dominated by weather conditions in the northern and southern hemispheres – and this year is proving to be no exception.

Short-term weather forecasts indicate that US producers will enjoy dry, warm conditions to plant both soya beans and maize promptly this spring.

Fears of worsening soya oversupply on top of the record high domestic soya bean stocks have helped drive prices lower.

If rains do delay maize planting, analysts argue that this could encourage US farmers to switch yet more acreage to soya beans, exacerbating the soya glut come autumn.

As a result of these concerns, the Chicago May soya bean futures contract has come under pressure, sliding to 478.0¢/bushel on Tuesday (27 April), from 493.8¢ a week ago.

Despite the dire supply/demand fundamentals facing US soya bean producers, there are several considerations that could lend support to the market.

Argentina has recently suffered flooding which will further delay its own soya bean harvest, already behind schedule, and could cause lasting crop damage.

The rebound in the Brazilian currency in recent weeks has reduced that countrys export competitiveness in comparison with the USA.

On the export side, the Russian aid programme is under way, with 10,000 tonnes of US food donations including soya beans to be booked this week.

Meanwhile analysts hope that the economic recovery in Asia will improve regional demand for soya beans in the longer term.