Argentina, the world’s third-largest soybean exporter has been hard-hit by drought, and yields are even worse than expected, with analysts revising their expectations downwards.
Hamburg-based oilseed analysts World Oil said that it expects global soybean crushings to be reduced by 9m tonnes in September/August 2008/2009, and Reuters has reported that while drought has played a role, Argentinean farmers have turned away from soy as the government placed caps on prices in local markets and imposed export curbs in an effort to keep food prices down.
World Oil said: “World soybean supplies will remain unusually tight until at least September when the new US soybean crop starts to enter the market. But it is still a long way to go. An early harvest would be helpful as global soybean stocks will be unusually tight as of end-August 2009.”
The analyst said that it expects combined stocks of soybeans from the US, Argentina, Brazil and Paraguay to fall to 45m tonnes as of the end of August. Last year, Argentina alone harvested 46.7m tonnes, but it is now forecast to harvest 34.5m tonnes this year, down from a forecast of 36.5m tonnes last week.
The Chicago Board of Trade (CBOT) soy price stood at 1186.25 cents per bushel at 10.30 GMT on Wednesday, up 0.85 percent.
Meanwhile, a recent report from the US Department of Agriculture (USDA) said that the food price spikes seen over the past two years were due to slower growth in production and higher demand for grains and oilseeds.
“Today, stocks of grains and annual oilseeds are the lowest since 1970," it said.
Moreover, stable food prices over the past two decades have "led to some complacency about global food concerns" and to a reduction in R&D funding levels, the USDA said.