Rabobank bearish on soyabeans, corn after supply-risk price surge

Soyabean and corn traders have priced in risks from the impact of adverse weather on output in South America, and markets for the two could now face downward pressures, the chief executive of Rabobank Singapore said on Monday. Unseasonal rains in Argentina's key producing regions ahead of the bean harvest in March and April sparked a rally in soyabeans and soyameal on worries about crop yields.
Over the same period, strong exports and dryness in Brazil turned that Latin American country - usually the world's second largest corn exporter - into a buyer. "Soyabean prices as well as corn prices have factored in these latest developments, dryness in Brazil and flooding in Argentina," Marcel van Doremaele, head of the bank's Singapore operations, told Reuters.
"We are slightly bearish on a lot of these grains right now and feel that the markets are a bit overdone." The Rabobank group specializes in commodities with a focus on food and agriculture. Soyabeans jumped 22 percent from April lows to $10.98 a bushel, while soyameal gained almost 60 percent to $419.80 a short ton.
Chicago corn rose to its highest in 10 months on strong export demand and short-covering last week. Flooding in Argentina has cut into the country's expected soyabean output by 4 million to 8 million tonnes, even as higher-than-expected yields in dryer areas offset some of the losses. Argentina could export up to 25 percent fewer soyabeans this year than last, analysts say, after severe rains left many fields underwater, damaging oilseed quality.
The country is the world's biggest exporter of animal feed ingredient soyameal and third-largest supplier of soyabeans. "We think that the world still has enough supply but from a situation where two months ago everybody thought it is very plentiful, we are now in a situation where a lot of these markets are balanced," van Doremaele said. One reason for the price surge over the last month was that the damage to Argentina's soyabean crop came amid strong demand from China.
China's soyabean imports surged 33 percent in April from a year ago, setting a monthly record, amid strong demand for soyameal and soyaoil. Funds have been actively boosting their long positions in soyabeans. "We have seen a lot of fund investments in these areas which turned their position from a net short into a net long position," van Doremaele official said.