Crystal ball gazing: Soybeans
The South American soybean crop is expected to lead a strong worldwide recovery in soybean production beginning in 2013. USDA projects a 15% crop output increase, but there will be low South American soybean inventories in the meantime, with some rumors that Brazil may have to tap US soybeans to fulfill its domestic needs. During the period of shortfall, USDA says the US share of the global soybean market would grow from the present 40% to 42%.
USDA says a good US crop is needed in 2012 and good crops are needed in Brazil and Argentina next spring to satisfy the global demand for soybeans in the 2012-2013 marketing year. During that period a 7% increase in global imports is expected, with much of that coming from China. Record high prices for soybeans in Brazil have spurred increased production for the coming year, with a switch back to beans from corn.
USDA economists report, “A favorably strong price ratio could expand soybean area in Brazil by 6 percent to 26.5 million hectares. On that higher area, the soybean yield trend for Brazil suggests a potential crop of 78 million tons, up from this year’s drought-reduced harvest of 65 million.” Comparatively, for Argentina, USDA economists report, “Argentine harvested area for soybeans is anticipated 11 percent higher to 19.7 million hectares. Late last year, extreme heat and drought devastated soybean yields throughout Argentina, slashing the 2011/12 crop to a 3-year low of 42.5 million tons. Assuming that Argentine soybean area and yields rebound, production for 2012/13 could increase to 55 million tons from 42.5 million this year.”
The increased global demand for soybeans is a function of the increased feed demand in China, which USDA says may continue to grow unchecked, while other importers, such as Europe, may ration their supplies due to prices.
Soybeans have a significant story to tell with a growing demand, but with supplies that are struggling to keep up with the demand. A return of better production weather will be needed to produce a good soybean crop in the US this summer and in South America six months later. While the US crop is limited by the need to share acreage with corn, substantial increases in acres for soybeans are anticipated in South America due to higher prices. The primary demand for soybeans will be coming from international feed demand, primarily China.
Source: FarmGate blog