From the November 2013 issue of Futures Magazine • Subscribe!

A winter’s tale: No dormancy for grains or livestock

Soybeans: Tight ending stocks Unlike corn, soybeans (CBOT:SX13) are still just getting by. Much of the U.S. picture actually will be determined by the current soybean planting and spring harvest for South America. We currently forecast U.S. ending stocks at 160 million bushels. That is a little higher than the old crop stocks that recently were revised from a tight 125 million bushels to now 141 million bushels. While these stock changes sound trivial, the new crop forecast is based on a usage of 3.1 billion bushels. A minor change in that U.S. demand picture can have a sharp impact on these ending stock numbers. China had flocked to the U.S. export market when Brazil focused on corn exports this fall as exportable soybean supplies started to run low. While the United States is the only shop in town right now, the trade expects a new record to be posted for Brazil and a near record for Argentina. Farmers in South America generally plant from mid-September through early November. With the corn planting delayed in the first four weeks of that window, the trade expects a good increase into soybeans.

Without any production problems, the U.S. export market would be only a temporary stopping point for world buyers. Soybean futures could fall to $12.50 per bushel in November, then even lower as spring rolls around. However this is not a done deal yet. The South American crop is not even fully planted. And even if big supplies are harvested, the trade has not forgotten the port mess in Brazil from this past spring and summer. If grain companies try to cram an even larger crop through those ports, which have not seen an increase in capacity, it certainly is possible a few extra orders for U.S. product could be made. It does not take much to turn a 160 million bushel ending stock and a slightly bearish forecast into a 120 million bushel estimate and a sharply bullish forecast.

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