Weather rules US soya market

By Joanna Levin

THE US soyabean market had a choppy week on weather-related issues and ended mixed. The Chicago July futures contract lost 2.25¢ to $6.138/bushel, but the November contract climbed 5.25¢ to close on Friday at $5.875/bushel.

At the start of last week, traders continued to react to bearish news of good growing conditions and better soil moisture in the Midwest. The rapid pace of planting and expectations of a high yield drove prices lower.

Farmers have planted 86% of their soyabean crop, well ahead of a five-year average of 58%. Later in the week, soyabeans enjoyed some strength on forecasts of a high-pressure ridge moving into the soyabean-growing Corn Belt.

The US Department of Agricultures latest supply/demand estimates, released last week, paint a bearish picture of severe oversupply.

The estimate for 1997/98 carryover stocks of US soyabeans is unchanged at 240 million bushels, but the 1998/99 carryover forecast has been raised by 15m bushels to 425m bushels, the highest since 1986/87.

In addition, Argentina is expected to produce 17m tonnes of soyabeans in its 1997/98 growing season, up from the previous USDA estimate of 16m tonnes.

Following the 20% drop in soya oil over the past month, the market traded sideways most of the week and closed on Friday at 25.86¢/lb for the Chicago July futures contract, up 0.22¢ on the week.

The precipitous drop in the market during May and early June reflects an expected increase in soya oil carryover stocks.

The USDA on Friday raised its estimate of the 1998/99 carryover for soya oil to 1.395bn lbs from 1.18bn lbs. This compares with 1.435bn lbs in 1997/98.