World demand for soybeans will continue to be robust, but South America’s large bean crop will start hitting the market in about 30 days, which could push prices lower.
In its latest World Agricultural Supply and Demand Estimates (WASDE) released Feb. 8, USDA cut projected ending stocks for the 2012-13 soybean crop to 125 million bushels, a drop of 10 million bushels from last month. The new projected carryout was slightly lower than trade expectations.
"The situation is still tight in the U.S., so prices will stay generally strong into the summer," says Jack Scoville, vice president of The Price Futures Group, Chicago. Scoville was the commentator on an MGEX press briefing following release of the report. "Beans could fall to $10 or single digits this fall if we have a fabulous crop, but if we don’t we could see pretty extreme prices given demand, particularly from China."
USDA raised its forecast for soybean crush by 10 million bushels to 1.615 billion bushels because of continued strong demand for soybean meal from end users, both foreign and domestic.
Tighter supplies spurred USDA to raise its U.S. season-average soybean price for the 2012-13 marketing year to $13.55 to $15.05 per bushel, up a nickel on both ends of the range. It left the soybean meal price unchanged at $430 to $460 per ton.
South America’s record strong crop
The biggest changes in USDA’s WASDE report for soybeans occurred in Argentina and Brazil. Timely rains that are expected to improve soybean yields convinced USDA to increase its forecast for bean production in Brazil, where growers are expected to produce a record-high crop of 83.5 million metric tons. That's up 1 million tons from last month’s WASDE forecast. Earlier this week, the Brazilian government released its own estimate for the country’s soybean production at 82.65 million metric tons.
If Brazil’s output is realized, it will surpass projected U.S. output of 82.06 million metric tons.
"Prospects for Argentina’s soybean crop have diminished in recent weeks due to an extended period of dry weather," USDA says in its report. As a result, the department lowered its forecast for Argentine soybeans by 1 million metric tons to 53 million.
"There will be plenty of beans coming out of South America starting in about 30 days," Scoville says. Despite wet weather earlier in the season and persistently dry conditions now, harvest is progressing adequately in Argentina. "Even with all the weather problems, Argentina will be harvesting an awfully big crop," he adds.
Changes in the global outlook, primarily in Brazil, raised world output for soybeans to 269.5 million tons, up slightly from last month’s 269.41 million, and ending stocks to 60.12 million tons, up from last month’s 59.46 million tons. While the 2012-13 projected ending stocks of soybeans are stronger than last year’s estimated 55.25 million tons, they are more than 15% lower than 2010-11’s 69.92 million metric tons.
Coverage, Analysis of the Feb. 8 USDA Reports
See all of the data, coverage and analysis of the WASDE and Crop Production reports.