Soybean exporters in the America, the world’s top shipper, sold 2.923 million metric tons to China in the biggest one-day deal on record. Prices in Chicago rose to the highest in almost five months. Global soybean consumption has soared in the past decade, fueled by economic growth in China, India and Brazil that boosted incomes and demand for vegetable oil used in fried and baked foods, candy and breads. People also are eating more meat, increasing the need for the oilseed to make livestock feed.
U.S. and Chinese officials yesterday signed a five-year accord to cooperate on agricultural production and trade and food security. This week, China signed agreements in Iowa to purchase 8.62 million tons of soybeans as Chinese Vice President Xi Jinping visited the state. The Asian nation purchased $22.17 billion of U.S. farm products last year, helping to boost total exports to a record. The sale includes 2.75 million tons for delivery in the year that begins Sept. 1 and 173,000 tons prior to Aug. 31, the U.S. Department of Agriculture said today in a statement. China is the largest oilseed importer and the biggest buyer of U.S. agricultural products.
“No doubt those were whopper sales,” Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa, said in a telephone interview. “With the Chinese in town, there’s something to that.”
Companies including Cargill Inc. and Archer Daniels Midland Co. signed contracts on Feb. 15 to export $4.3 billion of soybeans to China. U.S. Agriculture Secretary Tom Vilsack, who met with Xi and Chinese farm minister Han Changfu in Iowa during their visit this week, said the sales highlight a strong relationship he expects will expand.
“I have a good relationship with the Chinese agriculture minister, and I think these discussions will bring progress later” on boosting sales of soybeans and other products, including some U.S. beef cuts currently banned in the country, Vilsack said.
Soybean futures for May delivery rose 0.7 percent to close at $12.7375 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price reached $12.795, the highest for the most- active contract since Sept. 23.
“Agriculture has become one of the highlights in U.S.- Chinese relations,” Han said yesterday at a symposium in Des Moines. “Agriculture has had a huge benefit on both countries.”
The U.S. is the largest exporter of agricultural products. China, the most-populous country, bought $10.5 billion of the U.S. soybean crop last year, 29 percent of total production, according to USDA data.
U.S. and Chinese officials yesterday signed a five-year accord to cooperate on agricultural production and trade and food security. This week, China signed agreements in Iowa to purchase 8.62 million tons of soybeans as Chinese Vice President Xi Jinping visited the state. The Asian nation purchased $22.17 billion of U.S. farm products last year, helping to boost total exports to a record. The sale includes 2.75 million tons for delivery in the year that begins Sept. 1 and 173,000 tons prior to Aug. 31, the U.S. Department of Agriculture said today in a statement. China is the largest oilseed importer and the biggest buyer of U.S. agricultural products.
“No doubt those were whopper sales,” Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa, said in a telephone interview. “With the Chinese in town, there’s something to that.”
Companies including Cargill Inc. and Archer Daniels Midland Co. signed contracts on Feb. 15 to export $4.3 billion of soybeans to China. U.S. Agriculture Secretary Tom Vilsack, who met with Xi and Chinese farm minister Han Changfu in Iowa during their visit this week, said the sales highlight a strong relationship he expects will expand.
“I have a good relationship with the Chinese agriculture minister, and I think these discussions will bring progress later” on boosting sales of soybeans and other products, including some U.S. beef cuts currently banned in the country, Vilsack said.
Soybean futures for May delivery rose 0.7 percent to close at $12.7375 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price reached $12.795, the highest for the most- active contract since Sept. 23.
“Agriculture has become one of the highlights in U.S.- Chinese relations,” Han said yesterday at a symposium in Des Moines. “Agriculture has had a huge benefit on both countries.”
The U.S. is the largest exporter of agricultural products. China, the most-populous country, bought $10.5 billion of the U.S. soybean crop last year, 29 percent of total production, according to USDA data.
Soybean market came alive in early February 2012 as factors began to fall into place for U.S. soybean exports. Late in 2011, the USDA had projected the South American soybean crop would run 100-200 million bushels larger than last year's crop. "All eyes are on South America, and trying to look at the size of the crop," said Al Kluis, Kluis Commodities.
Soybean, on Feb. 3, the March 2012 contract closed at $12.32, May at $12.40, July at $12.50, August at $12.49, September at $12.42, November at $12.35 and January 2013 at $12.43.
"Soybeans at $12 are a fair value for both the farmer and the end user, but growing $12 soybeans at today's cost is not a real ‘get rich proposition'," he said. "It's really helpful the U.S. dollar is as low as it is. The international buyers still look at our prices as being competitive."
Ahead of the Feb. 9 World Agricultural Supply and Demand Estimate, traders expected the USDA would lower the soybean crop in Brazil, Argentina and Paraguay by 200-250 million bushels below the final 2011 crop size.
"This has had a really dramatic effect on what our export prospects are for the U.S. and also on our future global supply reports," Kluis said.
U.S. exports and the soybean carryover were not stellar this January. The 2010 carryover was forecast at 140 million bushels in early February 2011. The 2011 carryover was forecast at 275 million bushels in early February 2012.
In addition, U.S. soybean export sales for the final week of January were 308,400 metric tons for the current marketing year (11.3 million bushels) and 60,000 metric tons for next year (2.2 million bushels). In general, 20 million bushels per week is considered bullish for soybean export sales.
But traders were noting the smaller than expected South American soybean crop.
"When South America has production problems, their pain is our gain," Kluis said. "The soybean market has put on 80 cents a bushel just because of the recent production problems in South America."
Compared with prices back on Jan. 20, 2012, the March contract was 47 cents higher, May was 46 cents higher, July was 47 cents higher, August was 48 cents higher, September was 50 cents higher and November was 51 cents higher.
Kluis said that prices were not at a level where rationing will occur.
At an elevator in western Minnesota followed in this column, cash soybeans on Feb. 3, 2012 were $11.77 with a basis of 56 cents under per bushel. Compared with a price on Jan. 20 of $11.35, the price was 42 cents higher and the basis had narrowed by 2 cents.
"Watch what's going on in South America and Ukraine," said Kluis. "We have an evolving weather problem. It's something that will continue to have a market impact."
Soybean, on Feb. 3, the March 2012 contract closed at $12.32, May at $12.40, July at $12.50, August at $12.49, September at $12.42, November at $12.35 and January 2013 at $12.43.
"Soybeans at $12 are a fair value for both the farmer and the end user, but growing $12 soybeans at today's cost is not a real ‘get rich proposition'," he said. "It's really helpful the U.S. dollar is as low as it is. The international buyers still look at our prices as being competitive."
Ahead of the Feb. 9 World Agricultural Supply and Demand Estimate, traders expected the USDA would lower the soybean crop in Brazil, Argentina and Paraguay by 200-250 million bushels below the final 2011 crop size.
"This has had a really dramatic effect on what our export prospects are for the U.S. and also on our future global supply reports," Kluis said.
U.S. exports and the soybean carryover were not stellar this January. The 2010 carryover was forecast at 140 million bushels in early February 2011. The 2011 carryover was forecast at 275 million bushels in early February 2012.
In addition, U.S. soybean export sales for the final week of January were 308,400 metric tons for the current marketing year (11.3 million bushels) and 60,000 metric tons for next year (2.2 million bushels). In general, 20 million bushels per week is considered bullish for soybean export sales.
But traders were noting the smaller than expected South American soybean crop.
"When South America has production problems, their pain is our gain," Kluis said. "The soybean market has put on 80 cents a bushel just because of the recent production problems in South America."
Compared with prices back on Jan. 20, 2012, the March contract was 47 cents higher, May was 46 cents higher, July was 47 cents higher, August was 48 cents higher, September was 50 cents higher and November was 51 cents higher.
Kluis said that prices were not at a level where rationing will occur.
At an elevator in western Minnesota followed in this column, cash soybeans on Feb. 3, 2012 were $11.77 with a basis of 56 cents under per bushel. Compared with a price on Jan. 20 of $11.35, the price was 42 cents higher and the basis had narrowed by 2 cents.
"Watch what's going on in South America and Ukraine," said Kluis. "We have an evolving weather problem. It's something that will continue to have a market impact."
Soybean production is projected at 3.285 billion bushels, down 44 million from the 2010 crop mostly due to lower harvested area. Global oilseed production for 2011-2012 is projected at a record 459.2 million tons, up 2.2% from 2010-2011. Global soybean production is projected to increase less than 1% to 263.3 million tons. The Argentina crop is projected at 53 million tons, up 3.5 million from 2010-2011 crop based on a higher harvested area and yields.
Soybean prices futures for March delivery climbed 1.6 percent to $11.395 a bushel on the CBOT, bringing the gain this week to 2.9 percent, the most in two months. Soybeans rose on speculation that adverse weather will reduce yield potential in Argentina and Brazil, boosting demand for U.S. supplies.
Soybean yields are projected at a trend level of 43.4 bu./acre, down 0.1 bu. from 2010. Soybean supplies are projected at 3.47 billion bushels, down less than 1% from 2010-2011 as larger beginning stocks partly offset lower production. Soybean ending stocks for 2010-2011 are projected at 170 million bushels, up 30 million from last month due to reduced exports.
Soybean crush for 2011-2012 is projected at 1.655 billion bushels, up fractionally from 2010-2011 as a lower extraction rate offsets reduced total soybean meal demand. Lower soybean meal export demand projected for 2011-2012 is only partly offset by a small increase in domestic soybean meal use, leaving total soybean meal use down 1% from 2010-2011. Domestic soybean oil consumption is projected to increase 7% mostly due to biodiesel production gains. Soybean oil used for biodiesel production is projected at 3.5 billion pounds, up 1 billion from 2010-2011 reflecting a higher biodiesel use mandate.
With lower 2011-2012 U.S. soybean supplies and higher South American soybean supplies on hand this fall, U.S. soybean exports are projected at 1.54 billion bushels, slightly below the 2010-2011 level despite a projected increase in global import demand led by China. Ending stocks for 2011-2012 are projected at 160 million bushels, down 10 million from 2010-2011, leaving the stocks-to-use ratio at 4.8%.
The U.S. season-average soybean price for 2011-2012 is projected at $12-14/bu. compared with $11.40 in 2010-2011. Soybean meal prices are forecast at $350-380/short ton, compared with $350 for 2010-2011. Soybean oil prices are projected at 56-60¢/lb. compared with 53.5¢ for 2010-2011.
The Brazil soybean crop is projected at 72.5 million tons, down 0.5 million from the projected record 2010-2011 crop. A 3% increase in harvested area is more than offset by a return to trend yields. China soybean production is projected at 14.8 million tons, down 0.4 million from 2010-2011 due to lower area and yields. Higher rapeseed production for Canada, Australia, China and Ukraine more than offsets lower production for EU-27. For sunflowerseed, production gains for Russia, Ukraine and EU-27 more than offset reduced production in Argentina. Led by gains in global oilseed production, 2011-2012 oilseed supplies are up 2.4% from 2010-2011. With global crush projected to increase 3.5%, global oilseed stocks are projected to decline 1.5 million tons to 72.2 million.
Global protein meal consumption is projected to increase 3.6% in 2011-2012. Protein meal consumption is projected to increase 7.8% in China, accounting for 54% of global protein consumption gains. Global soybean exports are projected at 98.7 million tons, up 2.8% from 2010-2011. China soybean imports are projected at 58 million tons, up 3.5 million from 2010-2011. Global vegetable oil consumption is projected to increase 3.5% in 2011-2012, led by increases for China, India.
Soybean prices futures for March delivery climbed 1.6 percent to $11.395 a bushel on the CBOT, bringing the gain this week to 2.9 percent, the most in two months. Soybeans rose on speculation that adverse weather will reduce yield potential in Argentina and Brazil, boosting demand for U.S. supplies.
Soybean yields are projected at a trend level of 43.4 bu./acre, down 0.1 bu. from 2010. Soybean supplies are projected at 3.47 billion bushels, down less than 1% from 2010-2011 as larger beginning stocks partly offset lower production. Soybean ending stocks for 2010-2011 are projected at 170 million bushels, up 30 million from last month due to reduced exports.
Soybean crush for 2011-2012 is projected at 1.655 billion bushels, up fractionally from 2010-2011 as a lower extraction rate offsets reduced total soybean meal demand. Lower soybean meal export demand projected for 2011-2012 is only partly offset by a small increase in domestic soybean meal use, leaving total soybean meal use down 1% from 2010-2011. Domestic soybean oil consumption is projected to increase 7% mostly due to biodiesel production gains. Soybean oil used for biodiesel production is projected at 3.5 billion pounds, up 1 billion from 2010-2011 reflecting a higher biodiesel use mandate.
With lower 2011-2012 U.S. soybean supplies and higher South American soybean supplies on hand this fall, U.S. soybean exports are projected at 1.54 billion bushels, slightly below the 2010-2011 level despite a projected increase in global import demand led by China. Ending stocks for 2011-2012 are projected at 160 million bushels, down 10 million from 2010-2011, leaving the stocks-to-use ratio at 4.8%.
The U.S. season-average soybean price for 2011-2012 is projected at $12-14/bu. compared with $11.40 in 2010-2011. Soybean meal prices are forecast at $350-380/short ton, compared with $350 for 2010-2011. Soybean oil prices are projected at 56-60¢/lb. compared with 53.5¢ for 2010-2011.
The Brazil soybean crop is projected at 72.5 million tons, down 0.5 million from the projected record 2010-2011 crop. A 3% increase in harvested area is more than offset by a return to trend yields. China soybean production is projected at 14.8 million tons, down 0.4 million from 2010-2011 due to lower area and yields. Higher rapeseed production for Canada, Australia, China and Ukraine more than offsets lower production for EU-27. For sunflowerseed, production gains for Russia, Ukraine and EU-27 more than offset reduced production in Argentina. Led by gains in global oilseed production, 2011-2012 oilseed supplies are up 2.4% from 2010-2011. With global crush projected to increase 3.5%, global oilseed stocks are projected to decline 1.5 million tons to 72.2 million.
Global protein meal consumption is projected to increase 3.6% in 2011-2012. Protein meal consumption is projected to increase 7.8% in China, accounting for 54% of global protein consumption gains. Global soybean exports are projected at 98.7 million tons, up 2.8% from 2010-2011. China soybean imports are projected at 58 million tons, up 3.5 million from 2010-2011. Global vegetable oil consumption is projected to increase 3.5% in 2011-2012, led by increases for China, India.
Soybean prices may be poised to extend declines as supply increases from South America and demand growth may slow from China, the largest consumer.
Soybeans have “room to fall” below $11.50 a bushel in the long term, said James Zhou, director of trading, Cargill Investment (China) Ltd. Prices are still relatively high, enough to sustain planting interest, so output may increase, Zhou said today at a conference in Guangzhou, China. Soybeans traded at $11.755 on Nov. 11.
Prices in Chicago have dropped 16 percent this year on larger crops in Brazil and Argentina, the biggest producers after the U.S., and concern the European debt crisis may curb global economic growth. Soybean imports may drop this year for the first time since 2004, the China National Grain & Oils Information Center said Nov. 11. Goldman Sachs Group Inc. last week reduced its forecast for soybeans on rising supplies.
China’s “huge demand” for commodities may have reached a “major turning point,” and the growth of imports in the next three-to-five years may slow along with its economic expansion, said Fei Zhonghai, vice president of COFCO Ltd.,the country’s largest grains trader.
Soybean prices may decline to $9 a bushel or even lower as “we are entering bearish phases of the price cycles for soybeans, soybean oil and soybean meal,” which may last one to two years, said Anne Frick, a senior oilseed analyst at Jefferies Bache LLC. The key bearish factor is the economy, as well as trade protectionism and changes in biofuel policies, Frick said at the conference.
Soybean oil may drop to 34 cents per pound and soybean meal may slump to $260 per ton, Frick said. Goldman Sachs lowered its soybean forecast to $12.20 a bushel during the next three months and to $12.50 in six months, down from $12.60 and $13.
Soybeans have “room to fall” below $11.50 a bushel in the long term, said James Zhou, director of trading, Cargill Investment (China) Ltd. Prices are still relatively high, enough to sustain planting interest, so output may increase, Zhou said today at a conference in Guangzhou, China. Soybeans traded at $11.755 on Nov. 11.
Prices in Chicago have dropped 16 percent this year on larger crops in Brazil and Argentina, the biggest producers after the U.S., and concern the European debt crisis may curb global economic growth. Soybean imports may drop this year for the first time since 2004, the China National Grain & Oils Information Center said Nov. 11. Goldman Sachs Group Inc. last week reduced its forecast for soybeans on rising supplies.
China’s “huge demand” for commodities may have reached a “major turning point,” and the growth of imports in the next three-to-five years may slow along with its economic expansion, said Fei Zhonghai, vice president of COFCO Ltd.,the country’s largest grains trader.
Soybean prices may decline to $9 a bushel or even lower as “we are entering bearish phases of the price cycles for soybeans, soybean oil and soybean meal,” which may last one to two years, said Anne Frick, a senior oilseed analyst at Jefferies Bache LLC. The key bearish factor is the economy, as well as trade protectionism and changes in biofuel policies, Frick said at the conference.
Soybean oil may drop to 34 cents per pound and soybean meal may slump to $260 per ton, Frick said. Goldman Sachs lowered its soybean forecast to $12.20 a bushel during the next three months and to $12.50 in six months, down from $12.60 and $13.
Corn fell the most this month and soybeans dropped to the lowest price in almost three weeks as a rally in the dollar eroded prospects for U.S. exports and reduced the investment appeal of commodities.
The dollar advanced against all its major peers after MF Global Holdings Ltd. was suspended from conducting new business with the New York Federal Reserve and the Chicago Mercantile Exchange limited the firm’s customer trading to liquidation only. The Standard & Poor’s GSCI Index of 24 commodities fell as much as 1.6 percent amid concern European leaders will struggle to contain the region’s debt crisis.
“Concern about erosion of demand is weighing on the markets,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The uncertainty about European debt and the MF Global situation boosted the dollar and shifted the flow of money away from riskier assets.”
Corn futures for December delivery fell 2.2 percent to $6.405 a bushel at 10:36 a.m. on the Chicago Board of Trade. A close at that price would be the biggest decline since Sept. 30. Before today, the grain rose 11 percent this month on speculation that demand would improve.
Soybean futures for November delivery declined 1.4 percent to $12.0825 a bushel, after touching $12.035, the lowest since Oct. 11.
The U.S. is the largest producer and exporter. Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, USDA data show.
The dollar advanced against all its major peers after MF Global Holdings Ltd. was suspended from conducting new business with the New York Federal Reserve and the Chicago Mercantile Exchange limited the firm’s customer trading to liquidation only. The Standard & Poor’s GSCI Index of 24 commodities fell as much as 1.6 percent amid concern European leaders will struggle to contain the region’s debt crisis.
“Concern about erosion of demand is weighing on the markets,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The uncertainty about European debt and the MF Global situation boosted the dollar and shifted the flow of money away from riskier assets.”
Corn futures for December delivery fell 2.2 percent to $6.405 a bushel at 10:36 a.m. on the Chicago Board of Trade. A close at that price would be the biggest decline since Sept. 30. Before today, the grain rose 11 percent this month on speculation that demand would improve.
Soybean futures for November delivery declined 1.4 percent to $12.0825 a bushel, after touching $12.035, the lowest since Oct. 11.
The U.S. is the largest producer and exporter. Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, USDA data show.
Forecasts last week predicted more rain in Argentina, a major corn and soybean exporter. But the rains appear to be lighter than expected, stoking fears that dry weather will hurt yields in that country, said John Sanow, an analyst with Telvent DTN in Omaha, Neb.
Corn and soybean surpluses are low, so traders are anxious about any disruptions to global supplies. Demand from livestock producers and ethanol refiners has risen faster than farmers' ability to boost yields.
The March soybean contract gained 36.5 cents to settle at $12.33 Monday. March wheat gained 17 cents to $6.4175 a bushel. The March corn contract rose 8.5 cents to end at $6.52.
In other trading, metals prices were mixed.
February gold lost $8.70 to finish at $1,608.10. Silver for March delivery gained 9.9 cents to end at $28.782 an ounce.
March copper dropped 1.9 cents to $3.416 a pound. April platinum rose $21.40 to settle at $1,429.60 an ounce and March palladium gained $3.85 to $617.85 an ounce.
In energy trading, crude oil lost a quarter to settle at $101.31 a barrel. Heating oil rose 0.28 cents to finish at $3.073 per gallon and gasoline futures rose 0.74 cents to end at $2.759 per gallon. Natural gas fell 4.8 cents to finish at $3.05 per 1,000 cubic feet.
., says University of Illinois Agricultural Economist Darrel Good.
“One factor that has contributed to higher prices is adverse weather in parts of Argentina and southern Brazil during a critical phase of crop development. Periods of extremely high temperatures and well below average levels of precipitation in December have threatened both the corn and soybean crops in those areas,” Good says.
The adverse weather followed very favorable weather conditions in November. The weather pattern in those areas has been similar to that of 2008-2009 when corn and soybean production was substantially reduced in Argentina, he says.
“Some beneficial rainfall in the dry areas is expected this week, but the forecast calls for a return of hot, dry weather next week. It is difficult to assess potential corn and soybean production in Argentina and Brazil, but the pattern of production estimates in 2008-2009 might provide some guidance,” he notes.
In early December 2008, the USDA judged 2009 corn production potential in Argentina at 710 million bushels. The final production estimate was nearly 17% smaller at about 590 million bushels, he says.
The 2009 Brazilian corn crop was forecast at 2.1 billion bushels in December 2008, but actual production was nearly 5% less at 2 billion bushels. In early December 2011, the USDA forecasted the 2012 Argentine corn crop at about 1.14 billion bushels, Good says.
If production is eventually reduced by 17%, as it was in 2009, the crop would come in at about 950 million bushels. Similarly, the USDA has projected the 2012 Brazilian corn crop at about 2.4 billion bushels. If production is reduced by 5%, the crop would total about 2.3 billion bushels, he says.
“A 2012 South American corn crop that is 290 million bushels smaller than the current forecast would likely lead to larger U.S. corn exports in both the 2011-2012 and 2012-2013 marketing years,” Good says.
In December 2008, the USDA projected 2008-2009 marketing year U.S. corn exports at 1.8 billion bushels. Exports were 49 million bushels larger than the forecast, equal to about 22% of the reduction in the size of the South American crop from the December 2008 forecast, he says.
“This year, USDA projects U.S. corn exports at 1.6 billion bushels. A 290-million-bushel reduction in the size of the South American crop could boost U.S. exports by as much as 65 million bushels. The increase, however, might be smaller due to the abundance of feed grains and wheat in the rest of the world,” Good says.
Corn and soybean surpluses are low, so traders are anxious about any disruptions to global supplies. Demand from livestock producers and ethanol refiners has risen faster than farmers' ability to boost yields.
The March soybean contract gained 36.5 cents to settle at $12.33 Monday. March wheat gained 17 cents to $6.4175 a bushel. The March corn contract rose 8.5 cents to end at $6.52.
In other trading, metals prices were mixed.
February gold lost $8.70 to finish at $1,608.10. Silver for March delivery gained 9.9 cents to end at $28.782 an ounce.
March copper dropped 1.9 cents to $3.416 a pound. April platinum rose $21.40 to settle at $1,429.60 an ounce and March palladium gained $3.85 to $617.85 an ounce.
In energy trading, crude oil lost a quarter to settle at $101.31 a barrel. Heating oil rose 0.28 cents to finish at $3.073 per gallon and gasoline futures rose 0.74 cents to end at $2.759 per gallon. Natural gas fell 4.8 cents to finish at $3.05 per 1,000 cubic feet.
., says University of Illinois Agricultural Economist Darrel Good.
“One factor that has contributed to higher prices is adverse weather in parts of Argentina and southern Brazil during a critical phase of crop development. Periods of extremely high temperatures and well below average levels of precipitation in December have threatened both the corn and soybean crops in those areas,” Good says.
The adverse weather followed very favorable weather conditions in November. The weather pattern in those areas has been similar to that of 2008-2009 when corn and soybean production was substantially reduced in Argentina, he says.
“Some beneficial rainfall in the dry areas is expected this week, but the forecast calls for a return of hot, dry weather next week. It is difficult to assess potential corn and soybean production in Argentina and Brazil, but the pattern of production estimates in 2008-2009 might provide some guidance,” he notes.
In early December 2008, the USDA judged 2009 corn production potential in Argentina at 710 million bushels. The final production estimate was nearly 17% smaller at about 590 million bushels, he says.
The 2009 Brazilian corn crop was forecast at 2.1 billion bushels in December 2008, but actual production was nearly 5% less at 2 billion bushels. In early December 2011, the USDA forecasted the 2012 Argentine corn crop at about 1.14 billion bushels, Good says.
If production is eventually reduced by 17%, as it was in 2009, the crop would come in at about 950 million bushels. Similarly, the USDA has projected the 2012 Brazilian corn crop at about 2.4 billion bushels. If production is reduced by 5%, the crop would total about 2.3 billion bushels, he says.
“A 2012 South American corn crop that is 290 million bushels smaller than the current forecast would likely lead to larger U.S. corn exports in both the 2011-2012 and 2012-2013 marketing years,” Good says.
In December 2008, the USDA projected 2008-2009 marketing year U.S. corn exports at 1.8 billion bushels. Exports were 49 million bushels larger than the forecast, equal to about 22% of the reduction in the size of the South American crop from the December 2008 forecast, he says.
“This year, USDA projects U.S. corn exports at 1.6 billion bushels. A 290-million-bushel reduction in the size of the South American crop could boost U.S. exports by as much as 65 million bushels. The increase, however, might be smaller due to the abundance of feed grains and wheat in the rest of the world,” Good says.
