 "For the year, the USDA projects exports at 1.075 billion
bushels, only 3.8 percent below the record shipments of last
year," said Darrel Good. "Through the first 34 weeks of the
marketing year, USDA reports exports of 907 million bushels,
only 2.4 percent less than shipped a year ago."However,
Census Bureau estimates for the first six months of the year
exceeded USDA estimates by about 26 million bushels. Last year,
Census Bureau estimates through the first six months of the year
were about 10 million bushels below the USDA estimates. For now,
it appears that exports are on the same pace as that of last
year."
Good's comments came as he reviewed the soybean market. He
noted that a small U.S. soybean crop in 2003 resulted in a
year-over-year decline in the domestic soybean crush.
"Since then, the size of the domestic crush has grown each
year, from 1.53 billion bushels in 2003-04 to 1.806 billion
bushels last year," he said. "For the 2007-08 marketing year,
the USDA projects the domestic crush at 1.84 billion bushels,
1.9 percent larger than the crush of a year earlier."
Good noted that the crush during each month of the first half
of the current marketing year was larger than the respective
month last year. The crush during the six months from September
2007 through February 2008 totaled 936.2 million bushels, 3
percent larger than the total of the previous year.
The USDA's projection of a 1.9 percent increase for the year
implies that the crush during the last half of the year will be
0.7 percent larger than the crush during the last half of the
2006-07 marketing year.
"However, the Census Bureau estimated the March 2008 crush at
152.6 million bushels, 2 percent less than the crush during
March 2007," he said. "The year-over-year decline in the monthly
crush estimate is the first since April 2006.
"The March estimate is subject to revision, but implies that
the crush during the last five months of the year must total
751.2 million bushels, 1.2 percent larger than the crush of a
year ago, in order to reach the USDA projection of 1.84 billion
bushels."
Good said that the slowdown in the domestic crush in March
2008 appears to be the result of a slowdown in the pace of
soybean meal consumption.
"Apparent consumption -- domestic and exports -- in March
2008 was about 3 percent less than during March 2007, the first
year-over-year decline since July 2006," he said. "Apparently
soybean oil consumption during March was a record 1.95 billion
pounds, 15.6 percent larger than consumption during March 2007."
[to top of second column] |
As of April 17, the USDA reported that 163 million bushels of U.S.
soybeans had been sold for export, but not yet shipped. Unshipped
sales of a year earlier totaled only 116 million bushels. The United
States appears to be benefiting from an interruption in export
shipments from Argentina due to the farmer strike protesting higher
export taxes.
"It appears that exports during the current year could exceed the
USDA projection, offsetting a potential shortfall in the domestic
crush," he said.
Good said the weakness in the soybean basis has been a topic of
discussion over the past year. Basis levels remain generally weak,
but significant strengthening of the old-crop basis has occurred
over the past four weeks. The average cash bid to farmers in central
Illinois was 85 cents under July futures at the end of March. By
April 25, that basis had strengthened to about 46 cents under July
futures.
"That is about equal to the basis of a year earlier, about 15
cents weaker than in 2006 and 30 cents weaker than in 2005," Good
said.
Lack of convergence of cash and futures prices at delivery
markets at maturity of futures contracts has also been an issue
since July 2007. Convergence was especially poor for the July and
September 2007 contracts and the January and March 2008 contracts.
As the May 2008 contract approaches maturity, more normal
convergence appears to be occurring, he noted. Chicago basis was
reported at minus 36 cents on April 15 and minus 20 cents on April
25. The average basis at Illinois River delivery markets south of
Peoria strengthened from minus 35 cents to minus 17 cents during the
same period.
"Bids for 2008 harvest delivery have also reflected a
strengthening, but generally a very weak basis," Good said. "The
average harvest bid in central Illinois was about 95 cents under
November 2008 futures on April 25, about 20 cents stronger than just
six weeks ago but about 60 cents weaker than a year ago.
"Continued strengthening of the basis may offset some of the
decline in futures prices expected over the next few weeks."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences]
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