"The pace of U.S. exports and
export sales has begun to moderate," said Darrel Good. "As of Feb.
19, cumulative export inspections were 7 percent below those of a
year ago. Just five weeks earlier, cumulative inspections were 5
percent larger than those of a year ago.
"As of Feb. 12, unshipped sales
of U.S. soybeans were 16 percent less than outstanding sales on the
same date last year. For the year, the USDA projects a 14 percent
reduction in U.S. exports."
Good's comments came as he
reviewed soybean prices. He noted that U.S. soybean production was
relatively stable from 1997 through 2002, averaging 2.747 billion
bushels in a range of 2.654 to 2.891 billion bushels. The larger
world appetite for soybeans has been supplied by South America.
"Brazilian production grew from
1.003 billion bushels in 1997 to 1.929 billion in 2003," said Good.
"During the same period, production in Argentina jumped from 412
million to 1.304 billion bushels. Those two countries accounted for
almost 45 percent of world soybean production in 2003, up from 29
percent just six years earlier.
"It has been anticipated that
the significant shortfall in U.S. soybean production in 2003 would
be offset by another large increase in the size of the South
American crop in 2004. The USDA surprised the market earlier this
month with an even larger forecast of the Brazilian crop. That crop
is now forecast at 2.241 billion bushels, 312 million larger than
the 2003 harvest."
With production expected to be
at 1.341 billion in Argentina and 165 million bushels in Paraguay,
the 2004 South American crop is projected at 3.747 billion bushels,
360 million larger than the 2003 harvest.
"That increase would offset the
330-million-bushel reduction in the size of the U.S. soybean crop in
2003 and contribute to a 5 percent increase in total world oilseed
production this marketing year," said Good.
"However, expectations now
being reported from the private sector are for the Brazilian crop to
fall well short of the current USDA projection. Wet weather is
reportedly adversely affecting harvest in northern areas, and dry
weather is hampering crop development in southern areas. Private
expectations are generally 120 to 160 million bushels smaller than
the current USDA forecast."
Good noted that a
smaller-than-expected South American crop could have significant
longer term price implications.
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"The rate of U.S. soybean
exports and the rate of export sales have slowed significantly in
recent weeks, partly in anticipation of the availability of South
American supplies," he said. "Those supplies will still be very
large and will satisfy world demand from April through September.
However, if the world appetite for soybeans continues to increase, a
large U.S. crop will be required in 2004."
The first indication of the
potential size of the U.S. soybean crop will come with the USDA's
"Prospective Plantings" report on March 31. In the February baseline
projections, the USDA forecast a 400,000-acre increase in U.S.
soybean plantings in 2004. At the annual Outlook Forum last week,
the USDA projected a 1.1-million-acre increase in soybean plantings.
Larger acreage of other crops is also expected.
The February baseline
projections indicated a 600,000-acre increase in Conservation
Reserve Program area and a 2.4-million-acre increase in plantings of
major field crops. Those magnitudes of increases were also forecast
at the Outlook Forum.
"There is no question that
there is incentive to increase crop acreage in 2004 and that there
is considerable acreage competition in regions that produce some
combination of cotton, oilseeds, feed grains and wheat," said Good.
"The March report of 2004 planting intentions will be important not
only for indications of acreage of individual crops, but for
indications of total crop acreage.
"Even with an increase in
acreage, the U.S. average soybean yield will have to rebound
significantly in 2004 to produce a crop in line with expected use."
Domestically, the USDA has
forecast a 10 percent reduction in soybean crush, due to limited
supplies. Census Bureau estimates through December showed a
cumulative marketing-year decline (four months) of 0.6 percent. The
January estimate is not yet available, but the estimate from the
National Oilseed Processors Association for January indicated a
crush near the level of a year ago.
is now the task of the market to find a price that will result in a
significant slowdown in the rate of consumption and attract a few
more acres in the United States in 2004," said Good. "With South
American crop uncertainty and all of the U.S. growing season yet to
come, price action could be extreme for an extended period."
of Illinois news release]