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Wednesday, October 12, 2011

Soybeans Have Been Lost In The Fuss About Corn



 

As crop reports keep filtering in, much like election returns, they will allow the opportunity to compare how your farm voted, or yielded, in relation to other parts of the Cornbelt. While corn has received the most attention because of short supply, high demand, and even controversy, the 2011 soybean crop will not be a bin buster itself.  The yield this year will be below the long term trend, which is concerning because of the global needs for soybean oil and soybean meal in human and livestock foods and feeds.  While the US is no longer the largest producer, there are indications that South America will not grow soybeans to the maximum and that will require some adjustments.

In the Cornbelt, farmers are convinced that corn will produce more revenue per acre than soybeans.  In China, soybean acreage will decline also, and there are indications that soybean revenue in South America is secondary to other cropping alternatives.  $7 soybeans used to be a money-maker, but the prospect of “beans in the teens” is not drawing much of a crowd.  Iowa State University economist Bob Wisner says prices will have to go high enough to avoid a sharp drop in global acreage, and if they don’t then consumers of soybean meal and oil will have to adjust their practices.

Whether it is domestically consumed or exported, soybean meal volume has been slightly declining and is being replaced by increasing amounts of distillers dried grains at an equivalent energy level to soybean meal.  Wisner says the steady use of corn in the coming year for ethanol refining, compared to increasing levels in recent years, means that livestock producers should not count on an abundance of distillers dried grains.  While that will put more demand pressure on soybean meal, there are indications that hog numbers will be steady and poultry demand will be 4-6% less, which means a softer demand for bean meal.

Internationally, the soybean supply is keyed on South American production and demand is a function of Chinese purchases.  China bought 2 of every 3 rows of beans exported by the US last year, but the recent rate of growth is expected to slow slightly.  China says it will shift to alternative sources of protein meal and use of its own stocks.  Its soybean oil imports are also expected to slow in an effort to divert inflationary food prices blamed on higher soybean oil prices.

The shortfall of soybeans in the coming year in the US is expected to be filled with soybean stocks, says Wisner.  Prospects for production for the new crop are dependent upon South American weather, and the LaNina weather is expected to continue both in North and South America.  That increases the drought possibility in the main production regions.  He says global stocks should be sufficient, but US stocks will be tight by the end of the current marketing year.

Prices are expected to promote more corn acreage in 2012 as farmers head to the field both in South America and the US.  But that prospect is also expected to be an underlying support for beans, meal and oil in the coming year.

Summary:
Soybean acres and production are expected to decline for both the South American crop now being planted and the 2012 US crop, due to higher revenues for competing crops.  That will cause tighter supplies of soybeans, meal and oil in 2012 and beyond, which will necessitate some users shifting to alternatives.  In the US, that will mean more use of distillers dried grains to replace bean meal, and in China, other oilseeds will be used along with Chinese stocks.  Prices are expected to remain high, in an effort to buy as many acres as possible.

 

 

Posted by Stu Ellis on 10/12 at 11:01 PM | Permalink

Comments

USDA Reverse Magic In a “normal” illusion, we are told what to expect. The SUPER JUGGLER (SJ), USDA, performs tricks to produce a predetermined result as defined by others. We told SJ; “We want harvested corn acres down 500 thousand acres or so.” PRESTO CHANGEO ABRACABDABRA and a little HOCUS POCUS, the 10-12-2011 WASDE corn harvested acres for 2011-12 marketing year, goes from 84.4 million acres to 83.9 million acres; a decline of 0.5 million acres (500 thousand on the button). Is this an illusion or does the numbers reflect current acreage situation? Ohio and Mississippi Rivers flooded the first of May. The Missouri River started to overflow its banks the end of May. Hurricane Irene traveled up the east coast the end of August. The June 30th acreage report reflects the cropping situation as of June 1st. (Some of the Ohio and Mississippi River damage could have been adjusted in the June 30th acreage report.) We compared the October corn production report for corn with the June acreage report. The change in harvested acres was adjusted by the change in planted acres. (This process is an attempt to find damaged, to the point of being unharvestable. Other activities, other than damage, could account for the change. So this becomes a little better than a guess.) The results are: US -567,000 acres, Kansas -300,000 acres, Oklahoma -100,000 acres, Texas -100,000 acres, New York -40,000, Arkansas -30,000, Missouri -30,000, Mississippi -10,000, South Carolina -5,000 acres, Other States 8,000 acres, Georgia 10,000 and California 30,000. Kansas, Oklahoma and Texas seem to reflect the drought. New York and South Carolina might reflect the damage from Irene. Mississippi River flooding could include Arkansas, Missouri and Mississippi. The damage from Missouri flooding does not appear to have an offset except for, maybe, a part of Missouri. SJ seems to have pulled off another “good” trick; part real life, part to come later. There may be more reductions in corn’s harvested acres coming in future reports. There seems to be more Missouri flooding and Irene damage that needs attention. The illusion becomes the appearance of a 500 thousand acre drop in harvested corn acres when comparing September balance sheet with October’s. Only a small amount (the 67,000 acres) reflects additional destroyed planted acres after a planted acre adjustment is made. Good Trick . . . HEY? Jib aka Gibberish Ps Or in this case may be “BS”, The cards seem to point to ending 2011-12 corn stocks below 800 million bushel on or before the April 2012 Wasde report.

Posted by: Jib at October 13, 2011 2:02AM

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