Keith Menzie was one of the first people to see the new U.S. soybean production estimate, and it was a huge relief.
The U.S. Department of Agriculture employee’s job is to take the number provided by the National Agricultural Statistics Service (NASS), go into a locked room with his committee and hash out a balance sheet for the USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) report.
The October number made a lot more sense than September’s, when NASS reduced the average soybean yield to 35.3 bushels per acre from earlier estimates of 40.5 bu.
Read Also
Canada-U.S. trade relationship called complex
Trade issues existed long before U.S. president Donald Trump and his on-again, off-again tariffs came along, said panelists at a policy summit last month.
That dramatic yield decline gave him a scant 2.63 billion bu. of soybeans to work with. Menzie was forced to slot in only about one billion bu. of exports, which made no sense given the sales data he was seeing.
Soybeans were flying out the door, suggesting the export number in the September WASDE report should have been much higher, but he simply didn’t have the beans to justify it.
Even with his reduced export total, it meant the U.S. would have sold 70 to 80 percent of its exportable soybean supply by the end of September.
“That’s completely unprecedented. Usually, you’ve sold about 40 percent of what you’re going to export by the end of September,” said the chief oilseeds analyst with the USDA’s World Agricultural Outlook Board.
So he was relieved when NASS increased beginning stocks and harvested acreage and ratcheted up the average yield to 37.8 bu. per acre for the 2012-13 crop when it delivered the numbers to the lock-up at 2 a.m. Oct. 11.
“I had 265 million additional bushels to figure out what to do with this month that I didn’t know I had last month,” said Menzie.
“As an analyst, the world fits together better for me now because the sales data was just getting to be hard to deal with.”
Soybean prices had dropped before the release of the Oct. 11 WASDE report because markets knew the crop was going to get bigger due to favourable late-season rains.
Menzie got even more beans than he bargained for.
“That was a little bit of a nice surprise actually, although it was a lot more work because I wasn’t expecting quite that many bushels,” he said.
Despite the bigger crop, the November soybean futures contract initially jumped by 25 cents a bu. to $15.49 in the wake of the report as investors learned the newfound production would be offset by Menzie’s increases in exports and domestic crush.
The contract fell by the same amount the following day on news that the weekly export program was smaller than anticipated.
More soybeans to work with allowed Menzie to boost his soybean export forecast by 20 percent to 1.27 billion bu.
