A large global oilseed oversupply means nearby Chicago soyabean futures could test $5 a bushel, Hamburg-based newsletter Oil World said. "Soybean futures prices may soon fall to new contract low and test the $5.00 level unless it remains dry and South American crops turn out much lower than expected," it said. CBOT March soyabeans closed at $5.14-3/4 per bushel on Monday. "World supplies of the seven major oilseeds are very ample in 2004/05," it said.

"We now estimate world oilseed production to exceed demand by a record-breaking 23 million tonnes, resulting in record stocks of 71 million tonnes at the end of this season compared with the very tight 48 million tonnes one year (ago)."

It added: "We estimate US soyabean stocks at 11.15 million tonnes as of end-August 2005, up from last year's low of 3.1 million tonnes."

The global 2004/05 soyabean crop will reach 223.38 million tonnes from 184.84 million tonnes last season provided South American production areas have good weather, it said.

Brazil's soyabean crop was likely to reach a massive 61.60 million tonnes, down 200,000 tonnes on its previous estimate but up from 49.7 million tonnes last season.

Argentina's crop is seen rising to 36.90 million tonnes from 31.8 million tonnes.

Copyright Reuters, 2005