U.S. soy crop is nearing the end - logistics problems persist yet.
The threshed soya crop in the United States up on the remains of a few will be in the course of the coming week. The expectation of a bumper harvest was not disappointed, rather on the contrary, it assumes that the USDA estimate saddle on it again next Monday, 10 Nov. 14.
A great harvest would actually lead to price pressure, it has in the past also. But the recent strong upward does not quite fit the image. The risk premium in prices would actually be dismantled after a successful harvest and contribute to further rate cuts.
But this year, everything is a little different. The combination of extremely depleted overlay of old crop and the delay of the new crop to extraordinary supply bottlenecks in the U.S. soy meal market contributed. Tangible soybeans at the oil mills and - more critical still - usable soybean meal for the feedlots have driven the spot prices.
The situation has been exacerbated by inadequate transport capacity on rail and road. Even if the front need for immediate consumption should be soon enough covered, remains still the hamster effect, while holding up a soothing build-up of inventories at all soy users is built on. That keeps the courses on their toes, even if the horse jumps are over and done. The Rückwärtsrichten requires the settling some time.
Supportive assistance come from Brazil. According to local experts, the delayed appointment of soy will not lead to a restriction of the area. Rather, it is expected the opposite. The current and foreseeable soybean / corn price ratio in favour of an increased soy cultivation. The low maize prices at the dump to the inefficiency. In the largest connected region of Mato Grosso more soy beans are sown after expert estimate around 10 to 15%. However, it is to be expected by 2015 with a delayed Brazilian harvest in the Feb..
Extent to which these assessments are already incorporated in the upcoming USDA report, remains open for the time being. The previous tendency of rather decline forecast results would have to reverse itself. That would be a strong signal for price reductions in the soy.
But the falling euro exchange rate in the game comes to local consumers. With dwindling purchasing power of European currency, dollar-denominated prices are bogged down, maybe even more than offset. That dilutes hopes of sharply falling soya prices in this country.
ZMP Live Expert Opinion
The expectation of large successive soybean crops remains full. The record U.S. crop will be completed by mid-November without damage. Expect even more profitability. The logistical problems in the United States, but only for a short distance are the major obstacle.
Large supply is forecast from Brazil. The soybean / corn price ratio speaks clearly for the soybean. The South American crops come only in the spring months. Nevertheless, they throw their price shadows ahead.
For European consumer of soy, the weak euro exchange rate reduces the hopes expected dollar-quoted price cuts.
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