The price of the benchmark yellow no. 1 soybean has risen by about 20% since the beginning of 2012, to 1400 US cents per bushel, from 1180. Factors that contributed to this rise are drought related damage to South American harvests, optimism about China’s import demand, and a lower than anticipated acreage outlook in the US. Although these factors will continue to support sentiment in the short term, we believe that improved supply prospects will cause prices to fall back by about 15% to a belowconsensus 1200 cents by the end of 2012. There are three main reasons for our relatively bearish view.
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