As health concerns continue to drive market growth for soy ingredients, the market has been enjoying strong year on year growth, despite tight supplies.
And vegetable oils are taking the lion's share of the oils and fats market in the US as food makers continue to turn away from animal fats in favour of vegetable alternatives.
But drought concerns in US soy fields, the number one global producer of soybeans, have seen prices rising steadily over the past three months, and sharply over the past couple of weeks.
But yesterday July soybeans were 47 1/2 cents lower at $6.97 a bushel, and November soybeans were 49 1/4 cents lower at $7.16 1/2 a bushel.
According to US reports, private weather forecasters were in agreement that conditions would improve for soybean crops in Illinois.
Vegetable soy oil prices had been rising as fears over the dryness in the soil, that would impact the 2005 November harvest in the US.
'Nervous' prices have been compounded by a 'less than expected' harvest of 50 million tons pulled in Brazil for 2004/05.
Last week prices in Chicago, that more or less guides global oilseed prices, saw soybeans reaching $270 a ton. A sharp increase on May prices of about $230 a ton.
"Markets are watching the weather forecasts really closely, particularly for the key period of the last two weeks of August, and the first two weeks of September," Josh Dadd, an economist at the Home Grown Cereals Authority tells FoodNavigator.com.
Too much or too little rainfall in this critical window can drastically affect yields, he adds.