Exports for U.S. soybeans will soften once South America's crop hits the market
Soybean exports will soften as more of South America’s beans become available to the world market, and corn demand will remain strong offsetting the soft export market for corn, according to USDA’s latest World Agricultural Supply and Demand Estimates (WASDE), released March 8.
"In general, the report is a neutral report, relatively well-anticipated by the trade," says Jim Bower, president of Bower Trading in Lafayette, Ind. Bower was the analyst on a post-report MGEX press conference call.
Looking at corn first, USDA left projected 2012-13 U.S. corn ending stocks unchanged at 632 million bushels. The department also lowered projected corn exports by 75 million bushels, a move that was widely anticipated, and raised both feed use and corn imports.
"Corn exports have been dismal for the past couple of months," says Bower. The trade was anticipating that USDA would lower its forecast for corn ending stocks, which could be considered a small surprise in the numbers.
Competition from South American corn exporters has been stronger than expected, notes USDA in the report. Competitively priced feed wheat has also hurt U.S. corn exports, the department notes.
USDA’s forecast for feed and residual disappearance for corn was raised 100 million bushels due mostly to expansion in poultry production
USDA’s projected season-average farm price for corn was lowered 20 cents on the high end of the range to $6.75 to $7.45 per bushel.
Soybean exports to soften
Concern over tightness of old-crop U.S. soybean supplies was a major concern heading into the report, but USDA left ending stocks of old-crop soybeans unchanged at 125 million bushels, which is slightly higher than expected.
"USDA is somewhat hesitant to bring the estimate of the soybean carryout lower," says Bower. "In Brazil, the line up at two ports of embarkation is eight to nine days. There is 9.9 million tons of cargo space waiting to be loaded."
Eventually, he says, Brazil’s supply of soybeans will hit the world market, but until it does, China will continue to buy from the United States, and that will support prices.
"Although soybean export commitments through February exceeded last year’s pace, U.S. exports are expected to decline in the months ahead as increased competition from a record South American soybean crop limits additional U.S. sales during the second half of the marketing year," says USDA in the report.