Soybean Price Seen Falling by Oil World Amid Global Supply Surge

Jan 14, 2014 9:30 am ET

Jan. 14 (Bloomberg) -- Soybean prices probably will fall in the next several months as prospects improve for South American crops and farmers in the U.S. prepare to expand acreage, Oil World said.

There is “increasing likelihood” that Brazil’s record harvest will top 90 million metric tons, and Argentina’s crop probably also will be an all-time high of as much as 55 million tons after recent rain benefited fields that received too little moisture in December, the Hamburg-based researcher said. U.S. farmers probably will expand soybean planting this year, cutting corn acreage after the grain’s price tumbled to more than a three-year low, according to the report.

“A large U.S. crop in the autumn of 2014 (assuming normal weather) will coincide with still ample soybeans stocks in South America at the end of August 2014,” Oil World said. “The full impact of the bearish supply outlook on soybean prices may only unfold once the magnitude of the 2014 U.S. soybean crop is gaining shape.”

Soybean futures fell 8.3 percent in 2013, a smaller decline than in corn and wheat, which plunged 40 percent and 22 percent respectively, as surging Chinese demand supported the oilseed. Corn touched $4.0625 a bushel on Jan. 10 on the Chicago Board of Trade, the lowest since August 2010. The U.S. Department of Agriculture predicts global production of all three crops will rise to records in the 2013-14 season.

Soybeans for November delivery traded at a contract low last week below $11 a bushel, more than $2 a bushel discount to January futures, signaling traders are more bearish on prices later in the year, Oil World said.

Global Demand

Global demand for soybeans is still increasing, as exports from the U.S. and South America’s top five producers totaled 32.72 million tons from September through December, up 23 percent from a year earlier, Oil World said. Those six countries crushed 40.6 million tons of soybeans into meal and oil in the same period, up 6.9 percent from a year earlier. China has received a record 71 percent of U.S. soybean exports since the marketing year began Sept. 1, according to the report.

Soybean oil prices are “still searching for a bottom” amid waning demand for biodiesel in the U.S. and Argentina and ample supplies of competing products including sunflower oil, Oil World said. Futures slid to 37.42 cents a pound on Jan. 8 in Chicago, the lowest for a most-active contract since July 2010.

--Editors: John Deane, Sharon Lindores