 According to University of Illinois agricultural economist Darrel
Good, large U.S. exports are expected this year even with
record-large production in South America. Good said that the USDA's
Foreign Agricultural Service estimated the size of the 2013 crop in
South America (Brazil, Argentina, Paraguay, Bolivia, and Uruguay) at
5.377 billion bushels and forecasts the 2014 crop at 5.766 billion
bushels. The projected size of the 2014 crop is 1.515 billion
bushels larger than the drought-reduced crop of 2012.
"Compared to production this year, production in 2014 is expected
to be 220 million bushels larger in Brazil and 190 million bushels
larger in Argentina," Good said. "Larger crop expectations reflect
increased acreage, particularly in Brazil, and expectations of
slightly higher yields, particularly in Argentina. Production is
expected to be down slightly in Paraguay and Bolivia. The actual
size of those crops will not be known for several months, but
current weather conditions are generally favorable, and some
anticipate that the Brazilian crop in particular will be larger than
the current forecast," he said.
Good explained that the primary reason for the forecast of large
U.S. soybean exports in the face of record competition from South
American supplies is the strength of Chinese demand.
The USDA estimates show that China imported less than 1 billion
bushels of soybeans from all origins as recently as the 2004-05
marketing year. Those estimates show larger imports each year since
then, reaching 2.2 billion bushels during the 2012-13 U.S. marketing
year. Chinese imports during the current marketing year are
projected at 2.535 billion bushels. China accounted for 63 percent
of total world soybean imports during both the 2011-12 and 2012-13
marketing years. That share is projected at 66 percent for the
current year. China imported 864 million bushels of U.S. soybeans
during the 2011-12 marketing year and 791 million bushels during the
2012-13 marketing year. Exports to China accounted for 63 percent
and 60 percent, respectively, of total U.S. soybean exports in those
two years.
"Large soybean imports by China have been the result of the
combination of declining production and increasing consumption,"
Good said. "Chinese production totaled an estimated 639 million
bushels in 2004 and only 448 million bushels in 2013. China consumed
an estimated 1.583 billion bushels of soybeans during the 2004-05
marketing year, and consumption during the current marketing year is
forecast at 2.921 billion bushels. Chinese consumption of soybean
meal this year is forecast to be 126 percent larger than in 2004-05,
while consumption of soybean oil is expected to be 89 percent
larger," he said.
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According to Good, sales of U.S. soybeans for export during
the 2013-14 marketing year have been extremely large. As of Dec.
5, the USDA reported sales for the year that began on Sept.1,
2013, at 1.421 billion bushels, with nearly half of that total
already shipped. Additional large sales under the daily
reporting system have been reported since Dec. 5 and will show
up in subsequent weekly summaries. Sales account for just over
96 percent of the USDA's projection of exports for the year
ending Aug. 31, 2014. In the previous five years, total sales as
of the first week of December accounted for 53 to 83 percent of
total exports for the year. Sales to China as of Dec. 5 totaled
901 million bushels, or 63 percent of the total sales, with
additional sales reported since Dec. 5. Sales to "unknown"
destinations, which may include some sales to China, accounted
for an additional 14 percent of the total sales.
"With 38 weeks left in the 2013-14 marketing year, soybean export
sales are already near the total export projection for the year,"
Good said. "On the surface, it appears that either exports will
exceed the USDA projection or that prices will have to increase to
slow the pace of consumption. With year-ending stocks of U.S.
soybeans already forecast at a near-pipeline supply of 150 million
bushels, there is little room for exports to exceed the current
projection."
Good said that exports can be measurably larger only if the 2013
U.S. crop was larger than the current forecast (final estimate to be
released on Jan. 10, 2014) or the domestic crush is smaller than
forecast.
"A third alternative is that China will cancel some purchases of
U.S. soybeans if the South American crop turns out to be large and
prices are lower, and/or the current bird flu situation there
worsens and reduces the demand for soybean meal.
"Developments over the next few weeks will be critical for the
direction of old-crop soybean prices," Good said. "A combination of
export sales cancellations, a larger U.S. crop estimate or a larger
South American crop estimate would likely trigger a lower price
trend. Without such developments, current high prices would likely
persist a while longer in order to finish the rationing of old-crop
supplies. Protecting the downside price risk appears prudent," he
said.
[Text from file received from the
University of Illinois College of Agricultural, Consumer and
Environmental Sciences] |
