Soybean futures are to lose the stability which has marked the first half of 2011, and potentially approach record highs, as buyers compete for diminishing supplies.
Rabobank analysts, while saying it was likely that Chicago soybean futures would follow grains lower in the rest of 2011, lifted by $0.50 a bushel to $13.25 a bushel its forecast for prices of the oilseed in the last quarter of the year.
And higher volatility, fostered by a second year of falling world production at a time of buoyant demand, could yet see prices come close to the all-time high of $16.63 a bushel reached three years ago.
"The type of price movements we expect to see are in stark contrast to the narrow trading range of less than $2.00 a bushel witnessed during the first half of 2011," the bank said.
"In a worse-case [sic] scenario for US soybean production, we not the potential upside in excess of $16.00 a bushel should the US crop conditions continue their rapid descent."
'Signs of stress'
The proportion of the US soybean crop – the world's biggest - rated as in "poor" or "very poor" health has already reached 10%, the highest for this time of year since 2008-09, when the yield ended up at just below 40 bushels per acre.
The US Department of Agriculture is, for this year's harvest, forecasting a domestic yield of 43.4 bushels per acre.
"The late-planted crop is already showing signs of stress", the bank said, highlighting risks of disappointing production in Argentina, China and India too.
Meanwhile, demand is being spurred by record-high margins for manufacturers of biodiesel from soyoil, and by a return to positive margins for soybean crushers in China, the top soybean importer.
"Already more than 20% of the expected US soybean export volume for 2011-12 has been sold - a record-large amount for this time of year," Rabobank said.
This implied an export programme 30% above the USDA's current estimate of 40.7m tonnes – in contrast to a downgrade the department made two weeks ago to its forecast for shipments.
"This pace of both domestic and export demand will not be sustainable for a rapidly-shrinking US soybean crop.
"Soybean prices must transition into demand-rationing mode."
'Large speculative inflows'
The comments come as speculators appear to be renewing their interest in the oilseed, with non-commercial investors – a grouping which include hedge funds – near-doubling to 78,000 contracts their net long position in Chicago soybeans, official data late on Friday showed.
This represented the highest net long position for three months.
"The soybean complex saw large speculative inflows," Australia & New Zealand Bank analysts said.
"Speculative interest in the soybean complex leapt higher on the back of increased spreading and outright longs in soybeans and soyoil."
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