One of the most important crop reports of the year was released last week. And it was "neutral to friendly" to soybeans, says Grant Kimberley, director of market development for the Iowa Soybean Association.
USDA's final 2013 Crop Production Report, released Friday, January 10, 2014, increased the official estimate of the nation's soybean harvest for 2013 to nearly 3.3 billion bushels. That's up 31 million from the previous USDA estimate. The average yield for the U.S. for 2013 is pegged at 43.3 bushels per acre, up .3 bushels from December estimates. U.S. farmers planted a little more than 76.5 million acres of soybeans and harvested nearly 75.9 million last year, according to the report.
The USDA World Agricultural Supply and Demand Estimates (WASDE) Report, also released on Friday, indicates the extra bushels will be used. The government raised the soybean crush by 10 million bushels to 1.7 billion reflecting higher projected soybean meal exports. Soybean exports were increased 20 million bushels to nearly 1.5 billion reflecting record shipments, mostly to China, during the first quarter of the marketing year and strong sales through December.
U.S. continues to export soybeans and soybean products at a torrid pace this marketing year
The January 10 WASDE report pegged soybean ending stocks at 150 million bushels, unchanged from last month. Kimberley, who farms in central Iowa, says that's below trade estimates, but at a level the government considers to be a pipeline minimum. "The ending stocks will probably be closer to 120 million bushels when you figure in the massive pace of soybean exports. They are on fire," he says. "We are exporting soybeans and soybean products like crazy. We have nearly exported more soybeans as of January than what USDA projected for the entire year. Even if there are some cancelations later in the year, there will also be some additional sales."
Kimberley says the increase in soybean yield from earlier projections should keep prices fairly stable since demand is strong. The 2013-14 U.S. season-average farm price for soybeans narrowed by 25 cents on both ends of the range to $11.75 to $13.25 per bushel, according to these latest USDA projections released on Friday.~~~PAGE_BREAK_HERE~~~
Global soybean production is estimated at 286.8 million tons, up 1.9 million on gains from the United States and Brazil, the USDA's WASDE Report says. Brazil's soybean crop is estimated at a record 89 million tons. "The prospect for continued strong prices should encourage increased soybean acres in the U.S. as plans are made for the 2014 crop," says ISA president Brian Kemp, who farms near Sibley. "With the larger global production, the focus will likely shift to the South American harvest which takes place this March, as final planting decisions in the U.S. are being made by farmers."
ISU economist Chad Hart foresees a significant jump in soybean acres in 2014
Iowa State University grain economist Chad Hart foresees a 900,000-acre jump in soybean acres in Iowa to 10.2 million in 2014. A record 80 million acres are projected to be planted nationwide this spring. "Right now, beans are favored over corn in the market. I think we'll see some major shifting to soybeans," Hart says.
Meanwhile, China's buying behavior remains strong for U.S. soybeans. While China has recently turned away shipments of U.S. corn because the shipments contained GMO corn, some market analysts are also worried about soybean exports. China may begin canceling some of its soybean shipments in the coming months.
However, Iowa Soybean Association marketing director Grant Kimberley says it's not uncommon for China to cancel some American shipments, and he thinks the Chinese will be back, even when South American harvest picks up this March.
Overall, you can expect to see strong foreign and domestic demand for U.S. soybeans this year
Kimberley says, "South America has their logistics problems in transporting and shipping soybeans, and the Chinese buyers and other buyers around the world still tend to come back to the United States to buy some short-term or spot purchases. Even later in the year when the U.S. is not as competitive on a price the Chinese still buy some beans from us because they know they can get the supply quickly out of the United States." Kimberley says there may be some cancellations but the outlook is positive, "Overall, you're going to see a strong demand for United States and Iowa soybeans in particular."