Brazil truckers strike boosts US soybean prices

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  The Brazil truckers strike has resulted in a double-digit rally in U.S. soybean futures prices.

  From WATTAgNet:
  Brazilian truckers have been striking against high government diesel prices for the past two weeks, which means trucks that should be hauling the country’s soybeans have been kept idle. This resulted in a double-digit rally in U.S. soybean futures prices for the week of February 23, and potentially more foreign buyers of U.S. soybeans.
  On March 1, Brazilian police cracked down on the striking truckers, arresting protesters and clearing roadblocks. By evening, there were only 12 roadblocks nationwide, compared with 52 the day before.
  On February 27, old-crop soybean futures closed at between $10.30 per bushel for March and $10.10 for September. November new-crop futures remained below $10, closing at $9.96.
  USDA has reported that the 2014 U.S. soybean crop was valued at about $40.29 billion, based off an average national price of $10.20 per bushel. That’s compared with $43.48 billion for 2013, with an average price soybean of $13.
  Two of Brazil’s largest soy-exporting ports have warned that dwindling soy stocks at the ports could affect exports if the roadblocks continued. The country’s largest soy-exporting port has been operating normally for the past week.
  The strike has not only slowed grain deliveries, but it also has forced meat processing plants to close and started to result in bare shelves at some grocery stores.

2014 US corn, soybean crop forecast to keep prices trending lower

In August, our forecast for this September was that a record soybean crop would be reported by USDA, which is now well known by anyone who follows commodity supply and demand worldwide, and the price of soybeans has moved lower. Specifically, soybeans have lost roughly $0.90 or about 8 percent, and corn is down roughly $0.28. The corn crop is also going to generate a record supply. While the supply-side news is becoming well known by traders, producers and users, we believe the market still has more downside before a low is achieved.
Let’s make sure everyone is on the same page: A market low will not be known until we can look backward and see where the market is at the time vs. wherever the low was.
The early harvest yield reports are outstanding or very high compared to normal trend history. However, within another few weeks, actual yields vs. yield history vs. expected yields will soon be old news and have diminishing importance.
Short-term outlook
Domestically, livestock producers will be in a position where the two primary feed commodities — corn and soybean meal — will have a large supply, and the price has adjusted to those increased supplies. Right now, however, the soybean harvest is starting out slow, and old crop soybeans will remain very tight for another 2-3 weeks. Some users of feed protein may need to seek an alternative protein to use since there is more corn being harvested and processed than soybeans being processed to make soy meal or oil. To be more specific, wet milled corn makes corn gluten feed and meal, both with protein content. Nutritionists will need to use their expertise to adjust and balance the ration for the short term to a supply of feed that is available vs. proteins that will be difficult to obtain.
Can the news get any more bearish?
The short answer is yes. Believe it or not, if you add all 2014 U.S. crop production and estimated carryovers, subtracting some reduction for use and compare that with available storage as reported by USDA in both on farm and off farm, those numbers closely match … at about 23 billion bushels. This means that for a few states, there is not enough storage, and, more specifically, Indiana, Missouri, North Dakota and South Dakota have a problem. Right now, several elevators in the Dakotas are full of wheat and cannot take more bushels because they can’t move out what they have in their space. Some farmers in North and South Dakota may consider leaving their corn crop in the field over the winter months, harvesting in spring 2015 and hoping storage space will improve, along with transportation. Insufficient grain storage at the farm should cause sell-side pressure by farm producers.
It bears repeating that it appears very little of the nearly 4 billion bushel soybean crop has been priced and will be delivered to elevators or soybean crushers. We also believe the soybean crop could still get bigger by one half to one whole bushel per acre.
Commitment of Traders Report
Over the past month, seen in the chart CFTC Commitment of Traders Report, the Commodity Futures Trading Commission reports the commercial position in soybeans has increased its long position. It should not be this way, given a record soybean crop that is still mostly in the field. To explain, as farmers sell soybeans, the buyer of those soybeans would sell/short futures, thus the report would show commercials are short, not long, soybeans.
Farmers need to accept the fact that soybeans are fundamentally priced to current supply and demand … not $15 per bushel. The strong crop here in the U.S. has catapulted world soybean stocks, and all soybeans producers and users are getting a lesson in global supply and demand.
The size of the 2014 corn and soybean crop will keep prices mostly defensive and trending lower for another two to six weeks. The high quality expected from this corn crop should eventually stimulate export demand. However, we first need to be able to get this crop to a port for shipment, and right now rail and barge traffic has a few challenges of its own and won’t make transporting record supplies of corn and soybeans easy.
Tim Brusnahan joined Brock Associates in 1985 and provides commodity price forecasting, research analysis, hedging and marketing strategies for crop producers, dairy and livestock producers and procurement/risk management strategies for feed manufactures, corn processors, and other end users. Contact Brusnahan at 414.540.2607 and tbrusnahan@brockreport.com.
The views and opinions expressed are not a solicitation of trading futures and options contracts. There is risk of losses as well as profits when trading futures and options, careful consideration to all risk aspects of commodity/derivative trading should be considered before trading, and past performance is no indication of future results. 

US soybean futures up on increased overseas demand

Soybean futures rose for the third time the week of October 20 after the U.S. government reported increased overseas demand.
In the week ended October 3, exporters sold 929,752 metric tons of soybeans for delivery before September 30, more than double 2012 numbers, the U.S. Department of Agriculture said in its latest report. The top buyer was China, the world's biggest consumer. Sales of soybean meal jumped to 850,141 tons, the most since before 1990, government data showed.
"U.S. exporters just keep selling soybeans to China and other overseas customers," said Roy Huckabay, an executive vice president at Chicago-based Linn Group. "The jump in meal sales is the big surprise and the main driver for higher prices today."
Soybean futures for delivery in January climbed 0.2 percent to $13.065 per bushel at 10:23 a.m. on the Chicago Board of Trade. Soybean-meal futures for December delivery rose 1.1 percent to $425.90 for 2,000 pounds, after touching $427.40, the highest since September 19.
In the 12 months that started October 1, China's soybean imports may jump 16 percent to a record 69 million metric tons from a year earlier, and corn shipments might more than double to 7 million metric tons, according to the USDA.

Size of US corn and soybean harvest remains uncertain, USDA to resurvey

The corn and soybean markets continue to reflect uncertainty about the potential size of the 2013 United States corn and soybean crops. Over the past month, December 2013 corn futures have traded in an 80 cents range, and November 2013 soybean futures have traded in a $1 range as production expectations shifted up and down. Uncertainty about both acreage and yield prospects have contributed to the relatively wide trading range, according to University of Illinois agricultural economist Darrel Good.
"The U.S. Department of Agriculture's June Acreage Report showed that producers planted, or intended to plant, slightly more acres of both corn and soybeans than indicated in the March Prospective Plantings report," said Good. "The report also showed that the difference between planted acreage and expected harvested acreage of corn for grain was larger than average at 8.244 million acres. On the other hand, the expected difference between planted and harvested acreage of soybeans was smaller than average at 810,000 acres," he said.
Additional information about the likely level of planted and harvested acreage will continue to be available to the market. The USDA indicated that it will resurvey soybean acreage in 14 states during July and reflect any changes in the August Crop Production report. Some additional acreage information for both corn and soybeans may also become available through the normal survey process for the August, September, October and November production reports. Certified acreage data from the Farm Service Agency will also become available and should be reflected in the USDA's October production report.
Another source of information about the magnitude of planted acreage will be available with the Farm Service Agency reports of prevented planted acreage. Preliminary estimates are expected next month.
"The estimates of prevented planting are reported by crop and by state and will be used to judge the potential change between the June acreage estimates and actual planted acreage," Good explained. "The problem with using that information, however, is that there has been only a loose relationship between the magnitude of total prevented planted acreage and the difference between actual plantings and the June acreage estimate. In recent history, the largest prevented planted acreage occurred in 2011, when 9.6 million acres of all crops were reported as prevented planting. Prevented plantings of corn were reported at three million acres, but total planted acreage of corn was only 346,000 less than the June acreage estimate.
"Similarly, prevented plantings of soybeans were reported at 1.45 million acres, but actual planted acreage of soybeans was only 162,000 less than the June acreage estimate," Good said. "For 2009 and 2010, when prevented planted acreage was also large, the relationship between the magnitude of prevented plantings and the difference between actual acreage and the June estimate was only close for soybeans in 2010. For corn, actual acreage in 2010 exceeded June intentions by 320,000 acres even though prevented plantings were reported at 2.1 million acres," he said.
Given the lateness of the 2013 planting season, reported prevented planted acreage is likely to be large, Good said. In addition, some planted acreage has been lost to flooding. As a result, actual planted and harvested acreage of both corn and soybeans are likely to be less than the June estimates. The magnitude of the difference, however, may remain uncertain until October.
Good said that the same factors that have created uncertainty about planted and harvested acreage of corn and soybeans have also contributed to early-season yield uncertainty.
"Judging from current crop condition ratings, yield prospects at this stage of the growing season are quite good," he said. "However, overall yield prospects will be influenced less by developments to date and more by weather conditions over the next two months as the crops go through the reproductive and filling stages. Recent weather and near-term weather prospects are a bit of a mixed bag with almost ideal moisture conditions in many areas, but too much rainfall in some areas, dryness developing in some western areas, and generally above-average temperatures this week. As usual, there are some differences of opinion about longer-term weather forecasts. Prospects for moderating temperatures and thunderstorm activity, however, bode well for yield prospects. The markets will continue to monitor crop condition ratings for indications of yield potential," Good said.
Good concluded that even with harvested acreage less than currently estimated, prospects for corn and soybean yields near trend value in 2013 point to large crops and the likely buildup in stocks during the 2013-14 marketing year.
"Due to the extreme lateness of soybean planting in some western and northern growing areas, soybean yields may be at more risk than corn yields," Good said. "Soybean yield uncertainty could persist later in the season than is normally the case, with new-crop soybean futures reflecting more production risk than new-crop corn futures."

US corn, soybean production estimates continue fluctuations

The U.S. corn and soybean markets continue to reflect uncertainty about the potential size of the country's 2013 corn and soybean crops, according to reports. Since mid-June, December 2013 corn futures have traded in an 80 cents range, and November 2013 soybean futures have traded in a $1.00 range as production expectations shifted up and down. Uncertainty about both acreage and yield prospects has contributed to the trading range, according to University of Illinois agricultural economist Darrel Good.
"The [U.S. Department of Agriculture]'s June Acreage Report showed that producers planted, or intended to plant, slightly more acres of both corn and soybeans than indicated in the March Prospective Plantings report," said Good. "The report also showed that the difference between planted acreage and expected harvested acreage of corn for grain was larger than average at 8.244 million acres. On the other hand, the expected difference between planted and harvested acreage of soybeans was smaller than average at 810,000 acres."
Given the lateness of the 2013 planting season, reported prevented planted acreage is likely to be large, said Good. In addition, some planted acreage has been lost to flooding. As a result, actual planted and harvested acreage of both corn and soybeans are likely to be less than the June estimates. The magnitude of the difference, however, may remain uncertain until October.
Good said that the same factors that have created uncertainty about planted and harvested acreage of corn and soybeans have also contributed to early-season yield uncertainty. "Judging from current crop condition ratings, yield prospects at this stage of the growing season are quite good," he said. "However, overall yield prospects will be influenced less by developments to date and more by weather conditions over the next two months as the crops go through the reproductive and filling stages.
"Recent weather and near-term weather prospects are a bit of a mixed bag with almost ideal moisture conditions in many areas, but too much rainfall in some areas, dryness developing in some western areas, and generally above-average temperatures this week," said Good. "As usual, there are some differences of opinion about longer-term weather forecasts. Prospects for moderating temperatures and thunderstorm activity, however, bode well for yield prospects. The markets will continue to monitor crop condition ratings for indications of yield potential."
According to Good, even with harvested acreage less than currently estimated, prospects for corn and soybean yields near trend value in 2013 point to large crops and the likely buildup in stocks during the 2013-2014 marketing year. "Due to the extreme lateness of soybean planting in some western and northern growing areas, soybean yields may be at more risk than corn yields," he said. "Soybean yield uncertainty could persist later in the season than is normally the case, with new-crop soybean futures reflecting more production risk than new-crop corn futures."

US corn and soybean futures drop as exports slow

U.S. corn exports were down 43% in the week ending April 21, to 348,969 metric tons from a week earlier and the smallest amount in six months.

July corn futures on the Chicago Board of Trade dropped by the limit of $0.30 (4%) to close at $7.2925 on April 28, the biggest decline since March 15, according to analysts.
An easing of demand for U.S. supplies has contributed to the numbers. U.S. exporters sold 348,969 metric tons of corn in the week ending April 21, down 43% from a week earlier and the smallest amount in six months, according to the U.S. Department of Agriculture.
The price also fell on forecasts for drier weather in the Midwest that may allow for increased planting, said Dale Durchholz, senior market analyst at AgriVisor LLC. Only 9% of the U.S. corn crop was planted as of April 24, compared with 46% by this time in 2010, due to unfavorable weather. “Worries about U.S. planting delays may have peaked,” said Durchholz. “There is plenty of time to plant corn next month, and people are going to be surprised by how many acres farmers can plant in a short period.”
Soybean futures also fell from a two-week high as overseas and domestic demand eased, by $0.31 (2.2%), to close at $13.535 a bushel in Chicago. Earlier, the price reached $14.005, the highest since April 11.