Milling & Baking News - November 27, 2012 - 31

Continued from Page 28 October forecast but down 17% from 169 million bus in 2012, the U.S.D.A. said in its Nov. 9 WASDE. The U.S.D.A. 2013 carryover forecast was above the average of trade estimates that was near 133 million bus. U.S. soybean imports in 2012-13 were unchanged from October at 20 million bus, up 4 million bus from 2011-12. Total soybean supply in 2012-13 was projected at 3,160 million bus, up 4% from October but down 5% from 3,325 million bus in 2011-12. Total use of soybeans in 2012-13 was projected at 3,021 million bus, up 3% from October but down 4% from 3,155 million bus in 201112. Domestic crushings were projected at 1,560 million bus, up 20 million bus from October but down 8% from 1,703 million bus in 2011-12. Exports were projected at 1,345 million bus, up 6% from October but down 1% from a slightly upwardly revised 1,362 million bus in 2011-12. Mr. Meyers saw the U.S.D.A.’s 2013 soybean carryover projection of 140 million bus as “still tight,” as high prices had not resulted in as much rationing of supply as expected. The National Oilseed Processors Association estimated October soybean crush at 153.5 million bus, up 28% from September, up 9% from October 2011 and above trade expectations. The average price of soybeans paid to farmers in 2012-13 was projected by the U.S.D.A. to range from $13.90@15.90 a bu, which would be record high, but down from $14.25@16.25 a bu projected in October and compared with the prior record of $12.50 a bu in 2011-12.

Nearby January soybean futures prices were around $14 a bu last week, down about 20% from September highs above $17.50 a bu, but still about 15% above prices at the same time last year (nearby continuous futures basis). Mr. Meyers said he expected nearby soybean futures prices to average between $14.35@14.85 a bu during the ﬁrst quarter of calendar 2013, about 35c below that range during the second quarter and below $10 a bu in the fall. “After the November crop report the market shifts its attention to South America,” Mr. Meyers said. “South American weather will be key during the next three to four months.” He noted that weather conditions “haven’t been ideal” but recently have improved in most South American soybean growing areas.
Unlike corn, of which the United States typically produces more than 35% of the global total and has no single major competitor (China comes closest at around 22% but consumes most output domestically), there are large soybean crops about every six months from major Northern Hemisphere and Southern Hemisphere producers. In the past several years, the United States produced about 35% of the global total, Brazil about 28% and Argentina

about 20%. If U.S.D.A. projections hold true, Brazil 2012-13 soybean production, forecast at 81 million tonnes, may surpass U.S. production of 80.9 million tonnes for the ﬁrst time in history. More signiﬁcantly, record 2012-13 production in Brazil and Argentina, forecast at a combined 136 million tonnes, up 27% from 2011-12 and equal to 51% of forecast total world production, greatly reduces foreign demand for U.S. soybeans about four months from now. The soybean crop in Brazil was nearly 70% planted as of last week. Harvest typically begins in February and is in full swing during March. Mr. Meyers said he agreed with the U.S.D.A.’s sharp increase in forecast South American soybean production for 2012-13. Once South American soybeans are available, demand for U.S. supply “will fall off quickly,” Mr. Meyers said, which he indicated already was somewhat accounted for in the discount in deferred soybean futures prices to the nearby contract. Because of dry weather in key northern growing areas of Brazil, soybean planting began later and may delay harvest by two to three weeks from normal, he noted. Recent cancellations by China of about 600,000 tonnes of previously purchased U.S. soybeans may be a sign of things to come, but Mr. Meyers suggested there still was some foreign demand for U.S. soybeans likely before South American supply becomes available. In its Nov. 9 WASDE, the U.S.D.A. projected global 2012-13 soybean ending stocks at 60.02 million tonnes, up 4% from October and up 7% from 56 million tonnes in 2011-12. Global soybean production was forecast at 267.60 million tonnes, up 12% from 2011-12 and up 1% from 2010-11. World soybean domestic use was forecast at 261.03 million tonnes, up 2% from 201112 and up 4% from two years earlier. Mr. Meyers said he expects soybean oil prices to basically follow soybean prices over the next four months, although nearby soybean oil futures prices have declined more sharply than some expected, and deferred soybean oil futures were at a carry to nearby unlike soybeans, which were at a discount. Soybean oil prices have been pressured by large stocks and low prices for palm oil, Mr. Meyers noted. He said many buyers covered soybean oil needs through the ﬁrst quarter of 2013 when values dropped below 50c a lb, and that recent futures prices under 47c a lb “were a gift.” Nearby soybean oil futures were trading above 48c a lb most of last week, down about 10c from September highs. Looking forward, Mr. Meyers said he expects “much bigger” U.S. corn and soybean crops in 2013, mainly the result of increased yields due to more normal weather. He expects soybean planted area around 77 million acres, little changed from 77.2 million acres in 2012, as soybeans still will lose out to corn in the acreage battle because corn still is more proﬁtable per acre. MBN — Ron Sterk

bakingbusiness.com / world-grain.com

Milling & Baking News November 27, 2012 / 31

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Grain Market Roundtable

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Milling & Baking News - November 27, 2012

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