Prices Trend Lower with Larger Soybean Harvest

Central Illinoiscash soybean prices have trended lower since late August, a normal response to harvest pressure as the new crop enters the market. Late August rains across the Midwest contributed to higher-than-anticipated soybean yields and a 6-million-ton (9 percent) increase in the October production estimate. That additional supply has also contributed to the decline in prices.

A further rise in reported yield and production this month would put additional downward pressure on prices. However, strong demand could offset this pressure and provide support for prices until early 2013 when South American countries harvest a potential record crop. While early concerns over planting delays in South America have diminished, a slower start to plantings could delay their harvest, and provide an opportunity for the United States to make additional sales.

OVERVIEW

Global soybean production is forecast higher, supported by a larger U.S. crop which is mostly exported. Global trade is up driven largely by stronger imports by China. World imports for soybean meal and oil are raised slightly. The season-average U.S. farm price is forecast lower, but remains at a record.

SOYBEAN PRICES

U.S.export bids, FOB Gulf, in November averaged $599 per ton, down $50 from the previous month. The decline is attributed to seasonal harvest pressure, despite the strong pace of sales toChina.

As of the week-ending November 1, U.S. soybean commitments (outstanding sales plus ccumulated exports) to China totaled 16.0 million tons, compared to 13.3 million a year ago.  Total commitments to the world are 25.9 million tons, compared to 19.1 million for the same period last year.

2012/13 TRADE OUTLOOK

• U.S. soybean exports are up 2.2 million tons to 36.6 million on larger supplies and the strong pace of sales through October. 

• China’s soybean imports are raised 2.0 million tons to 63.0 million to reflect the record pace of shipments from the U.S.

• EU-27 soybean imports are up 300,000 tons to 11.0 million on improved demand for crush and meal use.

• Ukraine’s soybean exports are raised 150,000 tons to 1.8 million supported by EU demand. 

• Indonesia’s palm oil exports are up 500,000 tons to 19.6 million on larger supplies and competitive prices.