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7-7-2008 | Other news

Soybeans are moving again in Argentina after the farmers’ strike was cancelled. However, any adverse weather and subsequent yield impacts worldwide will have a major impact on the 2008/09 soybean market. Also any significant movements in the corn market will have to be watched carefully as attention begins to shift towards the battle for acres in late 2008 and early 2009.

• The lack of a clear resolution to farmer strike in Argentina increases the risk of further disruption to South American export program.
• US weather risks provide increased scope for additional acreage to shift from corn to soybeans.
• Record crude oil prices are also likely to underpin the soybean price outlook for the months ahead.   

Soybean prices
The increased export demand saw solid support for old crop contracts as concern grew over soybean export supplies. These concerns were exacerbated by flooding along the Mississippi river which restricted soybean movement further restricting export supply. With the ending of the Argentine farmers’ strike on June 20, near-term price direction will depend on Argentina’s ability to begin shipments of soybeans and soybean products.

World soybean fundamentals
The recent floods and subsequent deterioration of the soybean crop in the US have resulted in further tightening of the global soybean fundamental outlook. A tightening credit market and higher input costs in Brazil in conjunction with the continuing volatile situation in Argentina could see South American soybean plantings fail to reach earlier estimates.

US
Soybean plantings in the US were significantly delayed due to excessive moisture and flooding across the Midwest. Around 2 million acres of soybeans were damaged by flooding in Iowa with a further 1.4 million acres impacted in adjoining states. However, drier weather throughout the latter half of June allowed planting to resume relatively unhindered.

Brazil
Given trend yields Rabobank’s forecast for Brazilian soybean production in 2008/09 is currently 63 million tonnes, a 6% increase from the 2007/08 season. Higher returns for corn production could potentially see a shift in acreage to corn in some southern regions. The area planted to soybeans in Brazil is expected to expand moderately in 2008/09 to just over 22 million hectares. 

Argentina
Argentine farmers have started selling soybeans again following the cancellation of the farmers’ strike and the disbandment of road blocks by Argentine truckers. Truckloads of soybeans have begun to move to ports as farmers look to attain much-needed cash flow following the strike. Argentine exporters are now able to offer soybeans and soybean products for export again.