Soybeans seen by Chalmin as ‘hottest’ agricultural commodity

Soybeans, which have risen 21 percent this year, are the “hottest” agricultural commodity, according to Philippe Chalmin, professor of economic history at University Paris-Dauphine.

Price increases earlier this year were linked to U.S. farmers planting more corn at the expense of the oilseed and to demand in China, Chalmin said today at an event to publicize the CyclOpe commodity year book at the NYSE Liffe exchange in London. Soybeans are the best performer in the Standard & Poor’s GSCI gauge of 24 raw materials.

“Today, probably the market that is the hottest is soybeans,” Chalmin said. “China is subsidizing the import of soybeans in order to limit its inflation in food prices.”

U.S. farmers sowed the most acres with corn since 1937 after profit prospects improved and warm, dry weather encouraged growers to boost plantings, the government said on June 29. About 96.405 million acres were planted with corn, up 0.6 percent from 95.864 million forecast in March and compared with 91.921 million last year, the U.S. Department of Agriculture said in a report based on a survey of farmers.

Chalmin, who forecast earlier this year that the average soybean price in 2012 would be 15 percent below last year’s, said prices may remain at current levels or soften slightly. Soybeans for November delivery were up 1.3 percent to $14.565 a bushel on the Chicago Board of Trade recently.

Global Surplus

“We didn’t expect so much corn compared to soybeans,” Chalmin said in an interview. “If we have good weather, I don’t think prices will go up and they may even soften somewhat because these are historically high prices.”

The price of raw sugar is likely to average 20 cents a pound this year as supplies outpace demand, he said. The global sugar surplus will be 10.2 million metric tons in the 2011-12 season that started in October, according to Kingsman SA. Another surplus of 9.3 million tons is forecast for 2012-13, according to the Lausanne, Switzerland-based broker and researcher.

“I think prices should still go down, but it will depend of course on India. Will India export or not?” Chalmin said. “And of course, on Brazil and the arbitrage with ethanol.”

Both sugar and ethanol are made from sugar cane in Brazil. Millers there can direct more cane for the production of one or the other commodity depending on price incentives. The cost of producing sugar in Brazil has risen and the country is no longer the most efficient producer in the world, Chalmin said, adding the cost of extracting sugar from beets is at a par with cane.

India authorized exports of 4 million tons of sugar this season as local supplies are higher than demand.

The raw sweetener has fallen 6.7 percent in New York this year. The commodity for October delivery was up 1.6 percent to 21.75 cents a pound in New York recently.

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