KSU Soybean Market Outlook – November 2013

An analysis of U.S. and World soybean supply-demand factors and 2013 price prospects following the USDA’s November 8th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports is available on the KSU AgManager website   (http://www.agmanager.info/default.asp).

Following is a summary of the article on Soybean Market Outlook – with the full article and accompanying analysis to be available on the KSU AgManager website at the following web address http://www.agmanager.info/marketing/outlook/newletters/Soybeans.asp

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Summary

On November 8, 2013 the USDA released its monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports. Changes were made in “old crop” 2012/13 marketing year U.S. soybean supplies and usage – leaving U.S. soybean “old crop” ending stocks and % ending stocks-to-use marginally higher.  Higher projected 2013 U.S. soybean yields and production together with proportional increases in soybean domestic use and exports led to moderate increases in “new crop” 2013/14 ending stocks and % ending stocks-to-use, and a decrease in projected “new crop” U.S. soybean prices.

https://i2.wp.com/www.agweb.com/assets/1/6/NewsMainImage/web_Brazil_soybeans_combines.jpg

Pictures of the 2013 U.S. soybean harvest (Source: http://www.agweb.com/article)

USDA Soybean Forecast: The USDA projected 2013 U.S. soybean production to be 3.258 billion bushels (bb) – up 109 mb from September – and up from 3.034 bb in 2012.  This forecast was based on planted and harvested acreage of 76.5 and 75.7 million acres (ma), respectively, with both figures down 685,000-690,000 acres from September.  These decreases were more than offset by an increase in U.S. soybean yields to 43.0 bu/ac – up from 41.2 bu in September.  The USDA raised its forecast of “new crop” MY 2013/14 total supplies (3.413 bb – up 124 million bushels, ‘mb’) along with domestic crush (1.685 bb – up 30 mb), and exports (1.450 bb – up 80 mb), leading to an increase in total use (3.243 bb – up 103 mb).  As a result, “new crop” ending stocks were projected to be 170 mb – up 20 mb from September, and up from 141 mb last year.  Projected % ending stocks-to-use of 5.24% is up from 4.78% in September, but still down from 6.9% in August, and up from 4.55% in “old crop” MY 2012/13.  The USDA projected U.S. soybean prices for “new crop” MY 2013/14 to be $11.15-$13.15 /bu, down $0.35, and down from the record high of $14.40 in “old crop” MY 2012/13.

KSU Soybean Forecast: KSU projections of “new crop” MY 2013/14 supply-demand and price scenarios are:  a) “Lower Yield-Production” Scenario: 10% prob. of 76.5 ma planted, 75.7 ma harvested, 41.4 bu/ac yield, a 3.137 bb 2013 U.S. soybean crop, 4.44% S/U, & $13.25-$14.25/bu;  b) “Likely Yield-Production” Scenario: 80% prob. of 76.5 ma planted, 75.7 ma harvested, 43.0 bu yield, a 3.258 bb U.S. soybean crop, 5.24% S/U, & $12.10-$13.10/bu; and c) “Higher Yield-Production” Scenario: 10% prob. of 76.5 ma planted, 75.7 ma harvested, 44.9 bu yield, 3.397 bb 2013 U.S. soybean crop, 5.96% S/U, & $11.50-$12.50 /bu.

https://i0.wp.com/en.mercopress.com/data/cache/noticias/32563/0x0/brazil.jpg

A 2011 Article on Brazil’s growing role in international agricultural trade (Source: http://en.mercopress.com/2011/)

World Soybeans: Projected World soybean total supplies of 344 mmt in “new crop” MY 2013/14 are up from 322 mmt in “old crop” MY 2012/13, and up from 311 mmt in MY 2011/12.  Projected World ending stocks of 70.2 mmt (26.0% S/U) in “new crop” MY 2013/14 are up from 60.1 mmt (23.3% S/U) in “old crop” MY 2012/13, and up from 55.2 mmt (21.5% S/U) in MY 2011/12 in comparison to the recent low 19.9% S/U in MY 2007/08.

Market Perspective: Both domestic and export demand for U.S. soybeans are likely to be strong through the coming fall and winter months.  However, if a large South American soybean crop is produced in spring 2014, then just as occurred in 2013, U.S. export demand may decline when large exportable supplies of South American soybeans become available in 2014.  This scenario assumes continued strength of soybean import demand from China and elsewhere on the one hand – and also that improvements occur in Brazilian grain export logistical problems at their export locations in 2014 as opposed to the problems that occurred last year.

It is now likely that U.S. soybean price weakness will be limited in fall-early winter of late 2013 due to aggressive buying of lower priced soybean supplies by export customers such as China.  Price weakness will also likely be limited by farmer holding of soybeans in storage rather than selling at lower than anticipated fall 2013 U.S. soybean prices. Soybean price weakness or at least “moderation” is likely to occur in the spring-summer of 2014 if a record high 2014 South American soybean crop is produced and moved into export channels in a timely manner, which may be associated with higher U.S. soybean planted acreage in 2014.

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