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.
USDA narrowed its projected season-average price range for soybeans by 25 cents on both ends of the range to $13.80 to $14.80 per bushel.
USDA lowered its world ending stocks estimate for corn, from February’s 118 million metric tons to 117.5 million metric tons this month. World production was cut 310,000 metric tons on reductions in the size of both Argentina’s and Brazil’s corn crops.
USDA raised ending stocks of world soybeans slightly to 60.21 million metric tons, up from February’s 16.12 million.
"It takes the edge, at least temporarily, off the tightness in the soybeans," says Bower.
USDA lowered its projected world production figure for soybeans to 268 million metric tons from February’s 269.5 million, due to a 1.5 million metric ton decline in production in Argentina. Bower notes that the trade was anticipating that USDA would drop the Argentina production number for beans to as low as 50 million metric tons.
Despite the lack of any large surprises in the March WASDE report, soybean prices responded by trading lower. Corn prices were mixed.
Coverage, Analysis of the March 8 USDA Reports
See all of the data, coverage and analysis of the WASDE and Crop Production reports.
Market Snapshot, Noon CT (VIP) -- March 8, 2013
Power Hour: Corn Demand Recovery Forecast May Be Overly Optimistic