Why USDA Projects Large Soybean Exports Despite South American Competition
USDA increased the forecast of 2013-14 marketing year exports of U.S. soybeans by 25-million bushels to a total of 1.475-billion bushels in the December World Agricultural Supply and Demand Estimates report. That forecast is 155-million bushels larger than exports last year and just 26-million bushels less than the record exports during the 2010-11 marketing year. University of Illinois Ag Economist Darrel Good notes large U.S. exports are expected even with record-large South American production. He says the primary reason USDA is forecasting large U.S. soybean exports in the face of this competition from South America is the strength of Chinese demand. This marketing year - Chinese imports are projected at 2.535-billion bushels. Sales to China as of December 5th totaled 901-million bushels. There are 38 weeks left in the 2013-14 marketing year - and Good points out that soybean export sales are already near the total export projection for the year. Good says it appears exports will either exceed USDA's projection - or prices will have to increase to slow the pace of consumption. With year-ending stocks of U.S. soybeans already forecast at a near-pipeline supply of 150-million bushels - he says there is little room for exports to exceed the current projection. Good says developments over the next few weeks will be critical for the direction of old-crop soybean prices. He says a combination of export sales cancellations, a larger U.S. crop estimate or a larger South American crop estimate would likely trigger a lower price trend. Without such developments - Good says current high prices would likely persist a while longer in order to finish the rationing of old-crop supplies. He says protecting the downside price risk appears prudent.
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