August 19, 2013
US soy crop may recover this year
The year 2013 represents an important recovery year for US soy crop that suffered significant yield damage last year as a result of the drought afflicting most of the Midwest and High Plains.
The USDA in its first survey-based estimate of the season forecast US 2013 soy production at 3,255 million bushels, down 5% from the July trend-based projection and below trade estimates of 3,336 million bushels, but up 8% from last year and, if realised, still the third-largest soy crop on record, trailing 2009 and 2010.
The 2013 crop has rebounded with the wetter, cooler weather pattern this year. But the current beneficial growing conditions have come at a price: delayed planting, slower-than-ideal plant development, and the risk of a freeze that could inflict last-minute damage to the crop shortly before harvest, said Brian Harris, principal and chief financial officer at Global Risk Management in Tampa, Florida.
One impact of the later-than-average planting was a drop of 500,000 acres in forecast planted and harvested area from the USDA''s June Acreage report. The USDA re-contacted growers in 14 states who had indicated acreage as not yet planted when surveyed for the June report. The result was estimated planted soy area at 77.2 million acres, down from 77.7 in June, and harvested area forecast at 76.4 million acres, down from 76.9 million acres in June. If realised, harvested area would be up slightly from 2012 and the second highest on record.
Harris noted that only 58% of the crop in the 18 major states was setting pods as of August 11, down 10 percentage points from the five-year average, meaning the crop may be vulnerable to a "potential freeze event into the first or second week of September." He added that, despite the overall cool, wet spring and summer in the Midwest, there continue to be pockets of excessively dry conditions, specifically in western Iowa.
Soy yield was forecast at 42.6 bushels an acre, up three bushels, or 8%, from 39.6 bushels an acre in 2012 and the fifth highest on record if realised, the USDA said. The USDA forecast was below the average trade expectation of 43.6 bushels an acre.
In its August World Agricultural Supply and Demand Estimates, the USDA projected US soy carryover on September 1, 2014, at 220 million bushels, down 75 million bushels, or 25%, from the July projection but up 95 million bushels, or 76%, from 125 million bushels in 2013. The 2014 number was well below the average trade estimate of 263 million bushels.
The USDA also reduced domestic use and export projections for next year, based on reduced supplies and higher prices. The 2013-14 soy crush was projected at 1,675 million bushels, down 20 million bushels from July and down 10 million bushels from 2012-13. Exports were projected at 1,385 million bushels, down 65 million bushels from July but up 70 million bushels from this year, with South America, mainly Argentina, likely to get the extra business lost by the US, the USDA said.
Overall, though, Harris is a bit more bearish than the USDA, estimating the average soy yield at 43.2 bushels an acre, slightly above the current USDA estimate of 42.6 bushels per acre.
"That would mean ending stocks of approximately 250 million bushels versus the 220 million bushels projected by USDA," he said, which he noted would be enough to make the market feel more comfortable about stockpiles and lead to further long-term price erosion.
He said the market is currently looking for continued benign weather that will allow the crop to finish maturing well and escape any early freeze damage so there would be "a slow fade in price."
Harris said he did not expect soy prices to go below US$10/bushel in 2013, although he didn''t rule it out in early 2014. South American soy production is likely to expand on increased fall planted acreage.
The USDA projected the carryover of soyoil on October 1, 2014, at 1,635 million pounds, down five million pounds from 2013 and down 335 million pounds, or 17%, from 2012. Soy carryover was forecast at 300,000 tonnes in 2014, unchanged from July, 2013 and 2012.