Tight global supplies mean soyabean futures contracts have limited potential to fall up to January 2013 although they could face temporary selling pressure after touching record levels, Hamburg-based oilseeds analysts Oil World said on Tuesday.
"Soyabean futures are vulnerable to another setback on further fund selling," it said. "However the downward potential is limited for the contracts up to December 2012/January 2013 in view of the prospective severe tightness of global supplies of soyabeans and soyameal in September 2012/February 2013."
Soyabean prices hit record highs in late July as severe drought and a heatwave scorched US crops following drought-damage to Brazilian and Argentine crops earlier this year. Soyabeans have fallen from their peaks after rain in the US Midwest brought mild relief to the crop, but this Friday's supply-demand report from the US Department of Agriculture is widely expected to slash the US government's estimates of this year's US corn and soyabean crops.
There is great uncertainty about the level of damage to the US soyabean crop but several estimates indicate that there will not be enough soyabeans to meet global demand, Oil World said. "Severe demand rationing will be required, considering the sharply-reduced South American soyabean stocks currently available and the prospective unusually-small US soyabean stocks of or below 4.3 million tonnes as of end-August 2012," it said.