HAMBURG, Aug 7 (Reuters) - Tight global supplies mean soybean futures contracts have limited potential to fall up to January 2013 although they could face temporary selling pressure after touching record levels, Hamburg-based oilseeds analysts Oil World said on Tuesday.
“Soybean futures are vulnerable to another setback on further fund selling,” it said. “However the downward potential is limited for the contracts up to Dec. 2012/Jan. 2013 in view of the prospective severe tightness of global supplies of soybeans and soymeal in Sep. 2012/Febr. 2013.”
Soybean prices hit record highs in late July as severe drought and a heatwave scorched U.S. crops following drought-damage to Brazilian and Argentine crops earlier this year. GRA/ (nL2E8J3CKY)
Soybeans have fallen from their peaks after rain in the U.S. Midwest brought mild relief to the crop, but this Friday's supply-demand report from the U.S. Department of Agriculture is widely expected to slash the U.S. government's estimates of this year's U.S. corn and soybean crops. (nL2E8J3CKY) (nL2E8J3CKY)
There is great uncertainty about the level of damage to the U.S. soybean crop but several estimates indicate that there will not be enough soybeans to meet global demand, Oil World said.
“Severe demand rationing will be required, considering the sharply-reduced South American soybean stocks currently available and the prospective unusually-small U.S. soybean stocks of or below 4.3 million tonnes as of end-August 2012,” it said.
Oil World forecasts the smaller crops mean global soybean crushings will be reduced by at least 3-4 million tonnes from a year ago in Sept. 2012/Feb. 2013, even if soybean stocks are reduced steeply in the U.S. and other countries ahead of the arrival of next year’s South American soybean crops.
This will in turn cut output of the key animal feed soymeal and support soymeal prices.
“The global tightness will be much more severe in soymeal than in soyoil during Sept. 2012/Feb. 2013,” it said.
