In a weekly update, the American Soybean Association reports today that the soy complex closed lower on 22 July with new crop futures falling on good weather conditions for soy plantings.
But on the negative side, the oil's share moved sharply higher on concerns of tightening US oil stocks later this summer.
"Soybean oil stocks are expected to decline through September amid the prospective decline in the crush rate for the rest of the marketing year," writes the ASA.
Poor global harvests in the last 12 months, together with increasing demand from China, have squeezed the price for the major food commodities - and saw soy prices reaching 15-year highs in recent months. Moving up the food chain, higher prices for the source have impacted food ingredients suppliers and their food maker clients.
But according to investment bank Goldman Sachs, the volatility is slated to continue, marked in particular by uncertainty over Chinese imports that is exacerbating the seasonal volatility normally associated with planting and growing seasons.
"With stocks at minimal levels any positive demand or negative supply shocks will likely require price spikes to ration demand," said the bank in a report issued last month.
Recent credit tightening measures and moves by the Chinese government to slow the pace of economic growth have led to growing concern over the level of Chinese demand. For example, writes Goldman Sachs, Chinese imports of soybeans more than doubled in 2002/2003 over prior-year levels, in large part due to increased feed use for livestock, and this was a significant contributor to the tightening of the soybean market.
While tightness in soybean stocks is expected to begin to ease in the US, the increased supply will not be available until late this year, leaving soybean prices, like corn and wheat, vulnerable to supply shocks, the bank added.
Soy price volatility tends to rise starting in June, which is the middle of the planting season in the US, and then peaks in August towards the end of the flowering season, dropping in October and November when harvest progresses.
The ASA reported that August bean futures closed down $18.37, finishing at $241.59; September was $9.65 lower, closing at $220.64 and November lost $6.71 ending at $218.16.
Demand for soy-derived ingredients continues to enjoy strong growth on the back of rising consumer demand for health-promoting food products.
After a market growth of well over 10 per cent in 2002, soya-based drinks and desserts and meat-free and tofu products again showed double figure growth in 2003, reaching a value of €1.5 billion, according to new data from market analysts Prosoy. This growth is slated to continue at the same pace until 2006.
Soy-based dairy alternatives remain the most dynamic category, recording growth of close to 20 per cent in 2003.