The soybean rally has life left in it yet thanks to "alarmingly
tight" US inventories, Rabobank said, with values set to remain elevated for
another month or so, and potentially reach levels well above those futures are
The bank backed ideas of a steep fall in soybean prices later
in 2014, as supplies from what currently looks like being a record US harvest
Chicago futures will trade from $10.50-12.50 a bushel in the
last three months of the year, implying an even bigger drop than forecast by
futures, which are pricing in $12.34 ½ a bushel for November soybeans, and
$12.40 ½ a bushel for the January 2015 contract.
However, investors expecting another lurch lower in prices
for now, after a fall of some $1 a bushel over the past month, may be
disappointed, Rabobank said, citing the thinness of US inventories, which are officially
forecast to end 2013-14 at the lowest on record, compared with demand.
'Price rallies likely
"The need to ration an alarmingly tight 2013-14 crop is
likely to introduce upward price volatility over the next three months," the
"Year to day, prices have not sufficiently rationed demand
to ensure adequate supply through the summer.
"Price rallies are likely needed to ration old crop stocks
and imports to cover US demand through October."
Rabobank forecast soybean futures potentially hitting $14.75
a bushel during the July-to-September quarter, above the $14.21 a bushel that
July futures are factoring in, and the $13.66 a bushel at which the August is priced.
The analysis was based on an idea of stocks having been run
down to 287m bushels by the beginning of this month – a record low for the time
This estimate which factors in data on crushing volumes,
exports, and imports reported since March 1, when the US Department of
Agriculture pegged inventories at 216.6m bushels.
While many investors believe that the USDA's June 1 stocks
report, to be unveiled next Monday, will reveal surprisingly large inventories,
"a bearish surprise in the stocks report is doubtful", the bank said.
Estimates for the stocks figure have historically "always
been on the high side" relative to the actual number the USDA believes.
"Our expectation for the USDA June 1 soybean stocks is not
to find soybeans, but potentially a record low."