Soybean planting in South America may climb to a record as moisture conditions improve in some areas, Oil World said.
Farmers in South America’s top five producing countries may plant 54.2 million hectares (133.9 million acres) in the 2013-14 season, 2 million hectares more than last year, the Hamburg-based researcher said in an e-mailed report. Brazil may plant a record 29 million hectares, up from 27.7 million the prior year. Argentina’s sowing at 19.7 million hectares will be 3 percent larger than a year earlier. South American production in early 2014 may top last year’s record of 145 million tons if rain expands in dry regions, according to the report.
“Brazil could become the world’s largest producer of soybeans in 2013-14 if our current estimate of soybean plantings is achieved and if weather cooperates,” Oil World said. “The biggest question mark currently surrounds the planting prospects in Argentina, where recent rains were much too light to break the drought in the central and northern areas.”
Growing conditions are favorable in southern Brazil, Paraguay, Uruguay and Bolivia, Oil World said. Rain is forecast by the end of the month for dry areas in Brazil’s Mato Grosso, the top growing region, where planting has been delayed. Argentine farmers may shift some corn and sunflower area to soybeans, because the oilseed is usually planted later and there is still time for moisture conditions to improve, it said.
Argentina’s corn area was estimated at 4.3 million hectares, down from 4.6 million a year earlier, while sunflower area at 1.6 million hectares will drop 3.6 percent, Oil World said. Brazil’s corn area was pegged at 15.4 million hectares, down from 15.9 million in the prior season, and cotton area may jump 33 percent to 1.2 million hectares, the report showed.
South American soybean exports have been “unusually high” in recent months, with shipments 4 million tons larger than the prior year in August and 2.25 million tons bigger in September, Oil World said. Exports have increased to China, the European Union, Japan, Thailand and Egypt, it said. The U.S. has historically been the largest producer of the oilseed.
To contact the reporter on this story: Whitney McFerron in London at wmcferron1@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
South America’s 2013/14 soybean crop takes shape
Our neighbors to the south are planning to raise a record crop of soybeans for harvest early in 2014.
“The latest number right now for Brazil is 90.7 million metric tons (3.33 billion bushels) from Agroconsult. That group is sharply higher than the USDA’s estimate,” said Rich Nelson, Allendale chief strategist, in McHenry, Ill.
In the November World Agricultural Supply & Demand Estimate (WASDE) report, the USDA forecast Brazil’s 2013/14 soybean production at 88 million metric tons (3.23 billion bushels). Argentina’s production was forecast at 53.3 million metric tons (1.965 billion bushels), and Paraguay’s was forecast at 9 million metric tons (330 million bushels).
The WASDE numbers were updated on Dec. 10. Most of the soybean trade expected the USDA to increase their soybean planting intentions numbers for South America.
As of early December, the Buenos Aires Grain Exchange reported that South America had about 60 percent of their soybeans planted.
“Overall soybean planting is going just fine – no problems at all with any of the crops in Brazil or Argentina,” Nelson said, adding that Argentina had some heavy rainfall in November, and conditions were more dry going into December. The dry conditions were needed, although moderate to heavy rains were predicted for mid-December.
The USDA reported in early December that U.S. soybean sales had already reached 95 percent of the agencies export forecast.
“That is certainly good news, and we do expect USDA to raise soybean exports in the Dec. 10 report,” said Nelson.
Shipments remained ahead of average but not on the same pace as sales.
“A lot of these countries are holding back and are leaving the ability to cancel this product. That’s still an issue we have to work on here.”
Export soybean contracts can vary greatly, and there are various ramifications of cancelling a contract. Most contracts include some type of penalty for cancellation, but in some cases, cancellation fees are minimal.
With China continuing as the number one purchaser of soybeans, the U.S. does have to pay attention to the role of politics.
“The simple fact is that China needs the product. They can’t raise soybeans themselves, and they have a very well established pattern of using the U.S. as a secondary supplier for the period of July through January,” said Nelson. “We are a secondary supplier of soybean products to China.”
On Dec. 6, soybean futures traded on the CME Group exchange with January 2014 at $13.22, March at $13.06, May at $12.92, July at $12.84, August at $12.55 and September 2014 at $11.99 per bushel.
Compared with prices on Nov. 22, the January contract was 10 cents higher, March was 9 cents higher, May was 11 cents higher, July was 9 cents higher, and August was 2 cents higher.
The September future price on Dec. 6 below $12 per bushel was significant.
“This is a recognition that we are moving from a very tight supply environment back to what we can say are adequate to larger supplies now,” he said. “It is changing in the supply flow as far as U.S. growing commodities and lower prices we’ll see in the future.”
At one elevator in western Minnesota followed in this column, cash soybeans on Dec. 6 were $12.69 per bushel with a basis of 37 cents. Compared with the price back on Nov. 22 of $12.62, the price was 7 cents higher and the basis had narrowed by 13 cents.
Allendale is beginning to look at some U.S. soybean acre estimates for 2014.
“We certainly won’t see anything like the 7 million acre additional increase that some are calling for, for U.S. plantings,” he said. “We could see a 3-4 million acre increase.
“There’s no doubt the issue is soybeans will be more profitable to plant next year. You can still obtain some very moderate profits compared with our very large concern we have regarding corn pricing.”
Prior to the release of the Dec. 10 WASDE report, the marketing firm forecast a U.S. 2013 soybean carryout of 147 million bushels.
“This number is an adequate supply,” said Nelson. “It’s smaller than normal, but in today’s variant, we call that adequate.”
“The latest number right now for Brazil is 90.7 million metric tons (3.33 billion bushels) from Agroconsult. That group is sharply higher than the USDA’s estimate,” said Rich Nelson, Allendale chief strategist, in McHenry, Ill.
In the November World Agricultural Supply & Demand Estimate (WASDE) report, the USDA forecast Brazil’s 2013/14 soybean production at 88 million metric tons (3.23 billion bushels). Argentina’s production was forecast at 53.3 million metric tons (1.965 billion bushels), and Paraguay’s was forecast at 9 million metric tons (330 million bushels).
The WASDE numbers were updated on Dec. 10. Most of the soybean trade expected the USDA to increase their soybean planting intentions numbers for South America.
As of early December, the Buenos Aires Grain Exchange reported that South America had about 60 percent of their soybeans planted.
“Overall soybean planting is going just fine – no problems at all with any of the crops in Brazil or Argentina,” Nelson said, adding that Argentina had some heavy rainfall in November, and conditions were more dry going into December. The dry conditions were needed, although moderate to heavy rains were predicted for mid-December.
The USDA reported in early December that U.S. soybean sales had already reached 95 percent of the agencies export forecast.
“That is certainly good news, and we do expect USDA to raise soybean exports in the Dec. 10 report,” said Nelson.
Shipments remained ahead of average but not on the same pace as sales.
“A lot of these countries are holding back and are leaving the ability to cancel this product. That’s still an issue we have to work on here.”
Export soybean contracts can vary greatly, and there are various ramifications of cancelling a contract. Most contracts include some type of penalty for cancellation, but in some cases, cancellation fees are minimal.
With China continuing as the number one purchaser of soybeans, the U.S. does have to pay attention to the role of politics.
“The simple fact is that China needs the product. They can’t raise soybeans themselves, and they have a very well established pattern of using the U.S. as a secondary supplier for the period of July through January,” said Nelson. “We are a secondary supplier of soybean products to China.”
On Dec. 6, soybean futures traded on the CME Group exchange with January 2014 at $13.22, March at $13.06, May at $12.92, July at $12.84, August at $12.55 and September 2014 at $11.99 per bushel.
Compared with prices on Nov. 22, the January contract was 10 cents higher, March was 9 cents higher, May was 11 cents higher, July was 9 cents higher, and August was 2 cents higher.
The September future price on Dec. 6 below $12 per bushel was significant.
“This is a recognition that we are moving from a very tight supply environment back to what we can say are adequate to larger supplies now,” he said. “It is changing in the supply flow as far as U.S. growing commodities and lower prices we’ll see in the future.”
At one elevator in western Minnesota followed in this column, cash soybeans on Dec. 6 were $12.69 per bushel with a basis of 37 cents. Compared with the price back on Nov. 22 of $12.62, the price was 7 cents higher and the basis had narrowed by 13 cents.
Allendale is beginning to look at some U.S. soybean acre estimates for 2014.
“We certainly won’t see anything like the 7 million acre additional increase that some are calling for, for U.S. plantings,” he said. “We could see a 3-4 million acre increase.
“There’s no doubt the issue is soybeans will be more profitable to plant next year. You can still obtain some very moderate profits compared with our very large concern we have regarding corn pricing.”
Prior to the release of the Dec. 10 WASDE report, the marketing firm forecast a U.S. 2013 soybean carryout of 147 million bushels.
“This number is an adequate supply,” said Nelson. “It’s smaller than normal, but in today’s variant, we call that adequate.”
