Prices of US soyaoil, a derivative of soyabeans used in food and industrial products, should firm slightly this summer on tightening supplies, analysts said on Thursday.
Still, they expected US consumers to see little effect in retail prices, as the price of soyaoil is a relatively small component of supermarket food prices.
"The outlook for a very sharp drop in US soyabean crush this summer indicates that soyabean oil stocks should decline further over the next four months," said Anne Frick, oilseed analyst at Prudential Securities.
"Although not as sensitive as soyabean meal to soyabean production prospects, soyabean oil prices could respond with a rally on (US 2004 soyabean) crop concerns," she added.
US soyabeans are crushed into soyameal, a major feed ingredient for US chickens and hogs, and soyaoil.
The latter is used in edible oil products, such as shortening, margarines, salad and cooking oils, and in industrial products, such as chemicals, paints, adhesives and lubricants. Soyaoil is also to make biodiesel fuel, an alternative to petroleum diesel, but this year's higher prices have limited demand, the US government has said.
Soyabean oil futures traded on the Chicago Board of Trade hit a near-20-year high of 35.18 cents per pound on March 22 on strong domestic and Chinese demand, but have since dropped nearly 20 percent to close on Thursday at 29.38 cents per lb.
Still, US soyabean crushers are expected to slow their crushing operations this summer as US soyabean supplies drop to a projected 27-year low before the autumn harvest.
The US Agriculture Department estimates US soyabean crush in the current 2003/04 marketing year ending on August 31 will fall to 1.475 billion bushels, from 1.615 billion a year earlier.
But oilseed analysts say the crush is running at a faster pace due to very profitable crushing margins. But a possible surge in summertime US soyabean prices could make processing unprofitable, and prompt crushers to cut their operations.
The first soyabeans from the 2004 US harvest won't reach US oilseed processors until at least mid- to late-August following the harvest in the Mississippi Delta.
The US Census Bureau on Thursday estimated the US May soyabean crush totalled 117.6 million bushels, down from 130.48 million bushels a year ago but up from the 112.50 million bushels crushed in April. US soyabean oil stocks were seen at 1.576 billion pounds at the end of May, down from 1.643 billion last month.
"This was as expected," said Bill Nelson, grain and oilseed analyst at AG Edwards in St. Louis.
He and other analysts noted that the government has since January forecast record US soyaoil imports totalling 235 million pounds to alleviate this summer's projected tight US soyabean supplies. And the soyaoil imports may have already begun to trickle in, they noted.
"Stocks in the (National Oilseed Processors Association's) South Central district increased by 46 million pounds during the month (of May), leading some to suspect that imports of soyabean oil might have been responsible," Prudential's Frick said.
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