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The Trader's view 20-12-10

Date Added: 20/12/2010

SOYA BEANS MAY CONTINUE BULLISH TONE

The graph opposite shows January 11 Chicago soya beans price movements for the last 3 months. 

After a big sell off in November prices are now recovering as supply and demand worries have begun to resurface.

The prime reason for the bullish momentum is the increasing supply worries regarding the forthcoming soya bean crop in Argentina where there have been continued drought conditions for the last 2 months. Current crop estimates are only 43 to 48 million tonnes compared to 54.4 million tonnes a year earlier.

Whilst Chinese buying of soya beans has been a dominant factor in the last 12 months, record stocks have now accumulated in China of imported soya beans. This could provide a bearish slant to the otherwise bullish momentum as a decline in exports to China will reduce world demand accordingly.

Coinciding with potential lower world soya production than expected is the fact that stocks of vegetable oils are being eroded. This is particularly true at present for palm oil, rape oil and sun oil. Given this back drop we expect demand for oilseed rape to remain firm in the short to medium term.

 

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