For the Future of Farming


Nutritional News - The long and the short of it

The soya market has been under pressure recently although, all in all, it looks as if there should be a bumper crop, assuming that there’s not a similar weather pattern to that seen during Argentina’s previous harvest. The fear of dry weather has disappeared, with concerns now raised about the possibility of too much rain affecting harvest, says ForFarmers’ Phil Watkins. However latest yield expectations are still high, at close to 50 bushels per acre or more. 

Excitement about lower values should be tempered and the huge demand that’s currently coming from China should be considered, with close to 0.3MT arriving in Chinese ports every day.

Looking forward, this level may not rise quite as much as the USDA has predicted, even when its demand increases, because the Chinese government has also strongly intimated that it will incentivise growers to switch from corn to soya beans. But time will tell.

During the past few weeks the managed money (Funds) have started to sell off their long position, although they still remain roughly 45,000 contracts long, which leaves further room to the downside. They are obviously waiting for a weather event that may or may not happen.

Looking at the cereal market, the northern hemisphere is almost done and dusted with bumper crops being reported in both the US and Russia/black sea region. Europe has had a poor harvest with yields down approximately 10%, with France being the hardest hit. In the UK the trade position is short and the Funds are increasing their short position.

So control is in the hands of the grower with the physical market having to pay up for now.