A disappointment for the food industry the US government last week predicted a cut in the forecast for soybean production to the lowest level in nearly 30 years. Although up slightly on 2002 figures, the area for harvest is expected to be around 29.3 million hectares, with production coming in at 66.7 million tonnes.
According to figures from the US Department of Agriculture US soybean stocks are reduced to 3.4 million tonnes, the lowest level since 1976-77. Total US oilseed production is estimated to be 76.5 million tonnes, said the American Soybean Association this week.
On an optimistic note the US trade body said that soybean exports could reach 24.2 million tonnes based on strong, early-season shipments, especially to China. US soybean meal exports are forecast to be 4.08 million tonnes based in part on increased meal exports from South America and India, according to the USDA. Soybean oil ending stocks for 2002-03 are projected by USDA to be 544 thousand tonnes, the lowest since 1994-95.
Falling 0.282 tonnes from 2002, US yields are expected to average 2.773 tonnes per hectare. According to the USDA, the November pod counts were down slightly from last month and 7 per cent below last year. This is the lowest pod count since 1997 for the combined seven States (Illinois, Indiana, Iowa, Minnesota, Missouri, Nebraska, and Ohio). Pod counts are considerably below last year in Illinois, Indiana, Iowa, Minnesota, and Missouri, while counts are higher than 2002 in Nebraska and Ohio. USDA found that freezing temperatures the first week of October ended plant growth and promoted maturation.
The USDA predictions will do nothing to ease the volatility of soybean prices - a phenomenon that has marked the 2003 soybean market. Expect that to continue, university of Tennessee economist Delton Gerloff told the trade journal South East Farm Press earlier this month. "Beginning the 2003/2004 marketing year with relatively low stocks puts even more emphasis on the 2003 crop still in the field. With late season weather problems, yield projections for the 2003 crop have dropped over three bushels per acre since August, and October's crop report may drop yields further," Gerloff said. "The state [south east] seems set for support at these high prices, and even more volatile prices in the upcoming year."
Prices for soy ingredients continue to feel the pressure surging to the highest levels since January 1998, ending September at 677 cents/bu (88 cents/bu above end-August prices).
'Driving this price spike has been the increased uncertainty surrounding the US yield, following a drought earlier this year in the US Midwest, which has increased the likelihood that yields in the imminent crop year will be exceptionally low, possibly the lowest crop yield since the 1996/1997 crop,' said a recent research analyst report from Goldman Sachs.