Soybean seen falling on record supply

World soybean production may climb 7.3 per cent from last season to a record 286.5 million tonnes (mt), as output expands in South America

Soybean prices, which outperformed other crops including corn and wheat this year, may fall in the next six months as global production rises to a record, said Thomas Mielke, the executive director of researcher Oil World.

Prices will probably drop to $11.50 a bushel by June, Mielke said on Friday in an interview at Oil World's outlook conference in Hamburg. That compares with current prices on the Chicago Board of Trade at about $13.32 a bushel. World soybean production may climb 7.3 per cent from last season to a record 286.5 million tonnes (mt), as output expands in South America, he said in a speech.

"Soybeans will be the leader to the downside," Mielke said, adding that prices will drop if South America has favourable weather and "disease problems can be controlled."

Soybean futures dropped 5.5 per cent this year in Chicago, compared with a 40 per cent plunge in corn and a 14 per cent decline in wheat. The US Department of Agriculture predicts global production will climb to a record for all three crops. Chinese demand has supported soybean prices so far this year, and markets haven't yet accounted for the increase in world supplies, Mielke said.

Soybean harvests in South America's five largest producing countries may climb 9.4 per cent from the previous season to 158.5 mt, Mielke said. That includes a record 88.2 mt in Brazil and 55 mt in Argentina, he said. South American farmers are currently planting soybeans and will harvest the next crop in early 2014. Some areas of Brazil have experienced an infestation of caterpillars and are affected by soybean rust disease, he said. Prices may be supported if those problems intensify, Mielke said in a presentation at the conference. Brazil is the world's top soybean exporter and the second-biggest producer, after the US, according to the USDA.

World production of 10 major oilseeds, including soybeans, rapeseed and sunflower seed, may climb to 494.4 mt in the 2013-14 season, Mielke said. That's up from 466.05 mt a year earlier.