Soybean prices tumble, but there are some positive developments
Good said that the October report will also provide an update of planted and harvested acreage of soybeans. The current estimate of planted acreage of 76.08 million is 1.6 percent larger than the USDA’s Farm Service Agency report of planted acreage by program participants. That ratio is consistent with that of the previous four years, suggesting little change in the National Agricultural Statistics Service estimate. The current forecast of harvested acreage is 1.445 million less than the estimate of planted acreage. The difference is 400,000 to 500,000 larger than the difference experienced in years of favorable weather and is consistent with the 2012 growing season weather.
While soybean fundamentals have turned somewhat negative, there have been some positive developments.
“First, early season weather in South America has not been perfect,” Good said. “While current weather does not threaten the upcoming crop, it is a reminder that the record crop there is not yet harvested. Second, export sales of U.S. soybeans for delivery during the 2012-13 marketing year were reported at 779 million bushels as of Sept. 13. That is a record level of sales for this time of the year and represents nearly 74 percent of the USDA’s projection of exports for the year. With 61 percent of the sales to China and 23 percent to unknown destinations, there is some concern about cancellation of some sales if prices continue to decline. In addition, the pace of exports during the first three weeks of the marketing year was very slow relative to the pace needed to reach the USDA projection for the year,” he said.
Good said that a third positive development is the decision by the Environmental Protection Agency to increase the minimum biodiesel production from 1 billion gallons in 2012 to 1.28 billion gallons in 2013. “That increase will likely require an additional 2 billion pounds of vegetable oil for biodiesel production,” he said. “It represents about 7 percent of total U.S vegetable oil consumption in 2011-12. More than the minimum amount of biodiesel may be needed to meet the total advanced biofuels requirement in 2013.
“A soybean price rally would not be expected at harvest time, particularly if the USDA confirms prospects for a larger crop. However, the on-going tightness of supplies and the need to further ration consumption should provide some underlying price support through the end of the calendar year,” Good said.