Rabobank slashes soy price hopes on big US, South America crop prospects

27.04.2017

Rabobank slashed its price forecast for soybeans, citing ample crop in South America and expectations of record US sowings.

The bank forecast soybean prices to average $9.30 a bushel in the last three months of 2017, compared to the $10.10 a bushel average forecast last month.

November soybean futures are currently trading at around $9.60 a bushel,

Rabobank cited "a larger-than-anticipated South American crop, together with a forecast larger US 2017 planted acreage," weighing heavily on price expectations for the rest of the year.

And Rabobank suggested that Chinese soybean buying could slow until the start of July, as buyers wait for a drop in the country's agricultural import tariff, to 11 from 13% .

Big South American crop

Brazilian and Argentine soybean production is seen at a combined 166m tonnes, up 13m tonnes from last year.

Still, the bank did note some weather disruptions in Argentina, prompting a slight trim to expectations there.

"Soybean harvest in Argentina has been delayed in recent weeks by wetter conditions, which have also raised the possibility of smaller production losses due to localised flooding," Rabobank said.

In Brazil a record large crop of around 110m tonnes is now mostly in the bins, weighing heavily on prices.

But Rabobank noted that farmer selling has been slow in Brazil, "helping to build somewhat of a floor in prices".

"In our view, real-denominated prices would need to lift by 15% before farmers would be large-scale sellers again," Rabobank said.

Late sowing could move acres from corn to soy

The USDA last month pegged US soybean sowings at 89.5m acres.

Although Rabobank noted that the number could be lowered, by some 1m acres, in response to weaker soybean prices relative to corn in recent weeks, wet weather could prevent that that shift.

"Even though still early in the season, the current wetter US weather pattern, which is delaying corn plantings, needs to be monitored, as it might be adding to the case for higher soybean acreage."


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