MercoPress. South Atlantic News Agency

US 2008/09 soybean crop larger than 2007/08 harvest

The US 2008-09 soybean crop is forecast at 81.90 million tons, down 2.5 million tons from a previous estimate after heavy rain in the US Midwest, according to Hamburg-based oilseeds analysts Oil World.

"The US soybean crop will turn out sharply lower than earlier expectations" Oil World said. But it stressed the US crop would still be larger than the comparatively small 72.4 million tons harvested in 2007/08. "The already tight US corn and soybean supply and demand balance will be squeezed even further" it said. It forecast that US 2008-09 season opening soybean stocks at end-August 2008 will fall to only 3.80 million tons or 140 million bushels, substantially down from stocks of 15.62 million tons at end-August 2007. The forecast of low US August stocks would be bullish for prices, it said. "Rationing of US soybean exports and crushing is imminent," it added. It forecast US September 2008-August 2009 soybean exports will fall to 26.80 million tons from 30.0 million tons estimated for 2007-08. US 2008-09 soybean crushings are forecast to rise only marginally to 50.30 million tons from 50.25 million in 2007-08. In a further report, Oil World forecast that global oilseed and vegetable oil prices are likely to remain high between July 2008 and June 2009 unless governments reduce plans to expand bio-fuel use. "The market is in a critical situation," it said. "At the very high prices reached in Jan-June 2008, actual consumption has suffered for food - primarily in the low income countries - as well as for bio-fuels". It added: "There is a high probability that the 2008-09 season will be the third year in a row with a bull market unless governments significantly reverse bio-fuel support and mandatory (bio-fuel) usage targets". It forecast Argentine soy-oil will have an average price of 1,300 US dollars a ton FOB during July 2008-June 2009 up 18% on the average price in the same year-ago period. Refined, bleached and deodorized (RBD) palm olein is forecast to average 1,210 US dollars a ton FOB Malaysia in the period July 2008-June 2009, up 16%. But a likely larger global sunflower crop means Argentine sun-oil prices are likely to fall 7% on the year in this period to 1,360 US dollars a ton. The forecast of higher prices also assumes crude fossil oil averaging around 110 US dollars per barrel and normal to favorable weather in oilseed producing countries. "Owing to the current tight world stocks there is no leeway for any major crop losses," it said. "But if they occur they would have a bullish price impact".