Brazil Projects Record Bean Crop

February 26, 2013 08:30 PM

The spotlight is on South American competition in 2013

The key player in last month’s World Agricultural Supply and Demand Estimates (WASDE) report is South America, specifically Brazil. Domestic corn exports continue to decrease due to stiff competition from Brazil, notes Marc Schober, editor of Farmland Forecast, an educational blog that is devoted to investments in agriculture and farmland.

"Soybean demand remains robust in places like China, and soymeal exports have also been strong."

As weather improves, Brazil is estimated to produce a record soybean crop, surpassing the U.S. as the world’s largest producer of soybeans. 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 January’s WASDE forecast. The Brazilian government released its own estimate for soybean production at 82.65 million metric tons.

Prospects for the Argentina soybean crop have diminished in recent weeks due to extended dry weather. As a result, that crop is projected at 53 million tons, down 1 million from last month.

"We keep our eyes on the global market and international competition," says Grant Kimberley, Iowa Soybean Association director of market development. "Soybean demand remains robust in places like China, and soymeal exports have also been strong. Even with a projected large crop from South America this year, U.S. soybean exports should remain steady due to perpetual logistical bottlenecks at ports in South America."

Corn. U.S. corn ending stocks were increased by 30 million bushels from last month’s report to 632 million bushels due to export decreases, partially offset by a 20 million bushel demand increase from industrial use. The USDA projected a 50 million bushel decrease in corn exports due to a slow pace of shipments and competition from Brazil. The season average price range was lowered to $6.75 to $7.65 per bushel. Global coarse grain supplies were estimated to increase 2.1 million tons. Global corn production for 2012/13 was increased by 2.1 million tons with increases in Brazil, Mexico, India and Ukraine.

Soybeans. U.S. 2012/13 ending stocks were decreased by 10 million bushels to 125 million bushels because of an increase in crush production. The 2012/13 average soybean price was increased 5¢ on both ends of the range to $13.55 to $15.05 per bushel. Global soybean production was increased to 269.5 million tons as Brazil’s production prospects more than offset Argentina’s depleting weather and production conditions. Brazil’s production estimate has been increased by 1 million tons to a record 83.5 million tons. Analysts will continue to follow South American weather and production estimates as these as key indicators
of price movement.

Wheat. U.S. wheat ending stocks for 2012/13 were decreased by 25 million bushels to 691 million. U.S. wheat feed and residual use increased by 25 million bushels for 2012/13. The season’s average price for wheat was narrowed on both ends of the range to $7.70 to $8.10 per bushel.

Outlook. The February WASDE report has historically had minimal impact on the markets and this report confirms it. The majority of this data was already taken into consideration by the market and was in line with analysts’ expectations.

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