Price to ration old crop Warmer than normal summer could limit new crop yields for U.S. soybean crop
KISSIMMEE, Fla. — U.S. soybean supplies are tighter than the market thinks, says an analyst.
The U.S. Department of Agriculture is forecasting 1.35 billion bushels of soybean exports in 2012-13.
“We’re on pace to hit that by mid-April, and the marketing year doesn’t end until Aug. 31,” Arlan Suderman, senior market analyst with Water Street Advisory, said during an interview at the 2013 Commodity Classic conference.
Soybean exports are exceeding the pace to meet the USDA’s target by 200 million bu.
The story is much the same for the domestic crush, which is exceeding the pace to meet the USDA’s target of 1.62 billion bu. by nearly 80 million bu.
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The demand for U.S. soybean oil and meal has been exceptionally strong because of the dismal South American harvest last year.
Suderman said the U.S. can’t sustain the current level of crush and exports. The year-end soybean stocks-to-use ratio is already ex-pected to be record tight and can’t be squeezed much more.
“We’re going to have to shut some things down and start importing ourselves, and Brazil has got to be able to supply that,” he said.
The problem is that Brazil’s early-harvested soybeans were hit by 30 days of persistent rain, which reduced crop quality and disrupted shipments.
“They had to hold it back in order to blend and get enough good quality beans, and that added to the delays when the world was waiting,” said Suderman.
There are about 80 ships anchored in Brazilian ports waiting to be loaded with soybeans and other crops, which is three times as many as a year ago.
“That’s extending the U.S. export season at a time when we can’t afford to extend it,” said Suderman.
He believes the extreme tightness in the U.S. soybean crop has not been properly factored into markets and could support oilseed prices.
It could also further elevate already high prices for U.S. distillers grain. Supply of that feed is down because of slumping ethanol production.
Livestock producers in the U.S. Midwest may soon be forced to ship Brazilian soybeans and soybean meal up the Mississippi River from the Gulf of Mexico, which is expensive.
That will enable ethanol producers to charge more for their competing distillers grain, which in turn could result in higher pork and poultry prices.
Suderman said poor weather could limit the prospect of rebuilding soybean supplies this year.
Forecasters he works with are calling for moisture to increase in the Plains and western Midwest in the first half of spring, but he’s more concerned about temperature than moisture. The forecast calls for a cool March followed by above normal temperatures in April and May and then a warm and dry summer in the Midwest.
Suderman is forecasting an average U.S. soybean yield of 44 bushels per acre, resulting in 183 million bu. of ending stocks for 2013-14, or a 19.8 day supply.
“That doesn’t leave much margin for error if August weather is dry again,” he said in an email.
