Soybean prices could rise "toward record highs", boosted both by a squeeze in their own supplies and the rally in corn, US officials have said.

The US Department of Agriculture said that soybeans had appeared undervalued by the prices which had been prevailing, given the drain on supplies posed by thriving US exports.

Export sales sealed for 2010-11 had reached more than half the 1.52m bushels expected for the whole crop year - with 11 months left to run.

China, the world's top soybean importer, "is at the forefront of these export sales, with purchases up slightly from last year's torrid rate", the USDA said, while noting that shipments to Egypt, Indonesia, Mexico and South Korea were showing particular growth.

Market 'imbalance' 

While domestic demand was set to ease, undermined by "lacklustre demand" for soybean meal, there was a "growing imbalance between US soybean supplies and demand" which had not been reflected in prices.

"In fact, soybean prices could even strengthen toward record highs," the USDA said, in follow-up comments to its landmark crop report on Friday which trimmed expectations for America's harvest of the oilseed - besides the corn yield downgrade which caused uproar on grain markets.

Indeed, the rally of some 16% in corn prices since was another reason to expect higher soybean values, which derive "considerable support� through other agricultural commodity markets that are in short supply", the USDA said, echoing comments from other observers.

Friday's report raised to $10.00-11.50 a bushel the expected average farmgate price for soybeans in 2010-11, leaving it likely to beat the record $10.10 a bushel set three years ago.

The record Chicago futures prices was $16.63 a bushel, set in July 2008. The benchmark November lot stood at $11.86 a bushel at 08:30 GMT, up 0.6% on the day. 

Weather setbacks 

The USDA also expanded on its cut to its soybean harvest forecast, saying a yield trim of 0.3 bushels per acre, to 44.4 bushels per acre, reflected "a months-long dry spell [which] took a toll on yields throughout the south east".

A fall in the sowings estimate of 1.2m acres to 76.8m acres was down to poor conditions and competition from corn, which enjoyed near-ideal weather during its, slightly earlier, sowing season.

"In some western Corn Belt States, fewer soybean acres were planted last spring because fields were either switched to corn or had stayed too wet for farmers to complete their intended sowing," the USDA said.