HAMBURG - The current heatwave hitting US soybeans following small South American soy crops this year may mean global soybean, soymeal and soyoil supplies will be insufficient to cover demand in coming months, Hamburg-based oilseeds analysts Oil World forecast on Tuesday.
"The recent demand trends of soybeans and products cannot be sustained in the next five to six months," Oil World said."Demand rationing is inevitable due to insufficient world soybean supplies which will reduce crushings below the year ago level in July/Dec. and correspondingly cut global output of soyoil and meal."
Soybean futures hit all-time-high levels on Monday following a three week period of hot, dry weather in US grain and soybean belts.
The United States, the world's largest soybean exporter, had been expected to take over an even larger global soybean supply role in coming months after poor soybean crops in Brazil and Argentina, the second and third largest exporters.
"The current US drought could become a disaster for the global livestock industry as it follows the drought-reduced South American soybean crops harvested earlier this year," Oil World said.
"With deteriorating production prospects for corn and by the same token for distillers dried grains (byproducts of bioethanol output), demand for alternative feedstuffs like soymeal will rise, explaining why soymeal followed on the heels of the corn price rally in the past five weeks."
The deteriorating US crop will make it more difficult for US exporters to satisfy global demand for soybeans, soyoil and meal in the next six months, even if US soybean stocks are reduced unusually sharply, it said.
US Sept. 2012/February 2013 soybean exports are likely to surge to 32.0 million tonnes from 24.49 million tonnes in the same year-ago period, it said. Brazil's soybean exports in this time are likely to fall to 4.40 million tonnes from 10.02 million tonnes and Argentina's to 0.54 million tonnes from 3.72 million tonnes, Oil World forecasts.
But total global Sept. 2012/February 2013 soybean exports are still likely to fall by 1.5 million tonnes on the year to 41.43 million tonnes despite larger US shipments, it said.
"This will require demand rationing or at least demand postponing in the importing countries including China," it said."It remains to be seen to what extent China switches part of the import demand from soybeans to canola (rapeseed)."
There is potential for large Chinese rapeseed/canola purchases at current prices which are attractive compared to soybeans, it said.