USDA Oilseed: World Markets and Trade
11 July 2012
The Central Illinois soybean cash price reached $16/bushel in early July as searing
temperatures and drought gripped portions of the United States. The driest conditions,
centered on Illinois and Indiana, have impacted about 30 percent of the crop. This recent
price surge comes on top of a previous run-up in prices from early 2012 that followed
extensive crop losses in South America. At that time, soybean prices peaked a nearly
$15/bushel before falling on the strength of early U.S. plantings and improved production
prospects. However, as growing conditions deteriorated, prices moved higher over concerns
that current tight supplies could become even more constrained if hot, dry weather continues.
The large losses in South American production have reduced any cushion the market built up following the previous year’s record production. Stocks in exporter countries are now forecast to fall to minimum levels, so further crop losses could lead to short term price volatility and higher prices necessary to ration the diminished supplies.
Global 2012/13 soybean production is reduced mostly due to the smaller U.S. crop, which is
impacted by excessive heat and dry conditions across much of the growing area. Global trade is
down as a reduction in U.S. exports more than offsets stronger exports by Argentina and Brazil.
Global import demand for soybean meal and oil is virtually unchanged. The U.S. season average
farm price is forecast at a record.
Global 2011/12 soybean production is lower due to a reduction in the Argentine crop. Global trade is largely unchanged as stronger imports by China and Brazil offset reductions in Iran, Turkey, Thailand, and Malaysia. World import demand for soybean meal is higher, while slightly lower for oil. The U.S. season average farm price is higher.
U.S. export bids, FOB Gulf, in June averaged
$550 per ton, the same level as last month,
driven by continued strong foreign demand.
Concerns over dry conditions in the Midwest
have also supported the price.
As of the week-ending June 28, U.S. soybean commitments (outstanding sales plus accumulated exports) to China totaled 23.3 million tons, compared to 25.9 million a year ago. Total commitments to the world are 37.6 million tons, compared to 41.8 million for the same period last year.
2012/13 TRADE OUTLOOK
- U.S. soybean exports are slashed 3.1 million tons to 37.3 million on reflecting lower supplies.
- Argentina’s and Brazil’s soybean exports are raised 1.0 million tons to 11.1 million and 900,000 tons to 35.1 million, respectively, on strong demand and reduced competition from the United States.
- Canada’s soybean exports are up 300,000 tons to 3.0 million on larger supplies.
- Iran’s soybean imports are cut 500,000 tons to 262,000 as sanctions restrict trade.
2011/12 TRADE CHANGES
- Brazil’s soybean imports are boosted 200,000 tons to 235,000 on demand by crushing operations.
- China’s soybean imports are up 500,000 tons to 57.5 million tons reflecting stronger purchases from the United States.
- Iran’s soybean imports are slashed 500,000 tons to 265,000 based on trade trends.
Published by USDA Foreign Agricultural Service
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