Soybean heads for a slump

Global soybean prices are expected to plummet with the United States Department of Agriculture (USDA) forecasting a record crop and raising the national estimate of the average yield in 2004 to 42 bushels per acre from 38.5 bushels projected in September.

The USDA forecast has put the average US prices at $4.70 - $5.50 per bushel, down from the September estimate of $5.35-$6.25. During the corresponding period last year, prices were at $7.34.

The revised estimate has put the soybean crop at 3,107 bushels, up by 271 million bushels from last month's forecast.

In spite of use of carry-over stocks, soybean year-ending stocks are likely to triple to roughly 405 million bushels. This would be the largest inventory in two decades.

This month, global soybean production grew roughly by 6 million tonne from last year owing to a 7.4 million tonne increase for the US harvest.

This rise happened despite fall in the area under soyabean in Brazil to 22.7 million hectares. Production in Brazil could dip to 64.5 million tonne compared with 66 million tonne expected earlier following an attack of Asian Rust fungus on the crop.

Total global soyabean stocks were expected to increase by over 50 per cent to 59.3 million tonne as the demand from the European Union as well as south-east Asia were expected to stay at last year's level.

The soy complex witnessed a bear trend in futures trading in India. Despite rise in demand due to the onset of the festival season, extensive liquidation of positions took place in the last week on news that south American companies were selling produce at low prices in the domestic market.