Soybean traders are the most bullish this year on speculation that hot, dry weather in South America will curb production and boost oilseed demand from the U.S.
Eighteen of 28 surveyed by Bloomberg expect prices to gain next week, the highest proportion since Dec. 30. Prices will be 5.5 percent higher in three months because of lower output, Damien Courvalin, an analyst at Goldman Sachs Group Inc., wrote yesterday in a report. The U.S. Department of Agriculture will release estimates for South American crops on Feb. 9.
Goldman is predicting a rebound this year after prices slid 14 percent in 2011 on speculation global demand would wane amid slowing growth. The La Nina phenomenon that causes heavier rainfall in Asia and drier weather in South America led Rabobank International to forecast this week that Argentina’s output in the 2011-12 season will be the lowest in three years. The bank expects production to drop 5.3 percent this year and anticipates a second consecutive shortage in the 2012-13 season.
“The drop in South American production will put more pressure on U.S. exports,” said Erin FitzPatrick, an analyst at Rabobank in London, who forecast soybean prices would average $12.25 a bushel in the second quarter of 2012. Dry weather will cut production “because of yield loss,” even as the area harvested increases, she said.
Soybeans gained 1.2 percent to $12.2225 a bushel on the Chicago Board of Trade this year. That compares with a 2.6 percent advance in the Standard & Poor’s GSCI Total Return Index of 24 commodities and the 8.4 percent gain in the MSCI All Country World Index of equities. Treasuries returned 0.3 percent, a Bank of America Corp. index shows.
Brazil, the U.S. and Argentina are the biggest exporters of soybeans, used to make vegetable oil and livestock feed. The dry weather caused by a La Nina system has caused “irreversible crop damage” in Argentina, Hamburg-based oilseed researcher Oil World said on Jan. 31. The situation is “very critical” for at least half of the country’s soybean area, and crop prospects have deteriorated in the Brazilian states of Rio Grande do Sul and Parana, it said.
The USDA last month cut its forecast for world production to 257 million metric tons. That compares with a record output of 264.18 million tons in the previous year. Global inventories of the oilseed on Sept. 30 will be 63.43 million tons, down from 64.54 million forecast in December, the department said.
Traders also anticipate gains in corn and gold next week and declines in copper and sugar, the surveys showed.
The Federal Reserve last week pledged to keep interest rates low until late 2014 and Chairman Ben S. Bernanke said he’s considering additional bond purchases to boost growth. While commodities may pare gains made already this year, prices will “bottom out” in the second quarter, JPMorgan Chase & Co. wrote in a report dated Feb. 1.
“Any whisper of quantitative easing is going to create better demand for commodities,” said Walter ‘Bucky’ Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama. “We have a long-term bullish factor -- that the global growth will resume at some point.”
Gold survey results: Bullish: 20 Bearish: 8 Hold: 3 Copper survey results: Bullish: 11 Bearish: 15 Hold: 4 Corn survey results: Bullish: 17 Bearish: 8 Hold: 2 Soybean survey results: Bullish: 18 Bearish: 6 Hold: 4 Raw sugar survey results: Bullish: 4 Bearish: 6 Hold: 2 White sugar survey results: Bullish: 5 Bearish: 5 Hold: 2 White sugar premium results: Widen: 4 Narrow: 3 Neutral: 5