'Huge' soybean crop may still have tight carryout
Nov. 5, 2013
by Laura Lloyd
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WEST BEND, IA. –Karl Setzer, grain analyst at MaxYield Cooperative, remains unconvinced that the 2013 soybean crop will break the 44 bus-per-acre record posted in 2009, despite the viewpoints of some of his fellow market prognosticators.
But he agrees the crop will be “huge” and “right up there” with the biggest, predicting yields per acre of about 42 bus per acre and a total crop size of 3.2 billion to 3.3 billion bushels, above the most recent prediction from the U.S. Department of Agriculture in September, when the agency estimated total soybean production at 3.15 billion bus.
He said “yields have been better than what everyone predicted” but the harvested beans have been “a little bit wetter” than ideal. He added that as the storage bins fill there may be quality issues related to the bean’s not being fully dried, creating the possibility for mold.
As the harvest moves toward its conclusion, Mr. Setzer said he has seen an increase in movement, with farmers selling some of their new-crop supplies because soybeans for immediate shipment are commanding higher prices than those slated for sale later. “They want to capture the premium by selling now” and benefitting from the decent prices kept firm by the torrid pace of export sales, he said.
Like most observers of this year’s soybean crop, Mr. Setzer is awaiting Friday’s release of the U.S. Department of Agriculture’s November Crop Production report and November World Agricultural Supply and Demand Estimates. The reports are the first since September because of the October partial shutdown of the U.S. government. They will coincide with what will essentially be the conclusion of the soybean harvest.
The latest Crop Progress report released Nov. 4 pegged the soybean crop as 86% harvested in the latest week and Mr. Setzer expects rapid harvest progress for the small remainder of the crop still in the field.
Mr. Setzer said that, in addition to the overall size of the crop, the stocks-to-use ratio will have a powerful impact on new-crop soybean prices. He predicted a 7.5% stocks-to-use ratio, which he said suggests carryout in the range of 250-315 million bus that is still “a bit tight” although much improved from the 2012 carryout in the range of 120 million to 125 million bushels. Such a 2013 carryout would indicate nearby soybean futures of about $11.50@$12.00 a bu, about $1 a bu less than current levels.
He cautioned that even seemingly small adjustments in bushels per acre may have major ramifications for carryout. “One bushel up or down makes a huge difference,” he said. “A loss of one bushel an acre would take out 80 million bushels of carryout,” which would tighten stocks significantly amid strong export demand.
Mr. Setzer noted that sales abroad have been so strong since the new crop year began at the start of September that the U.S.D.A. may increase its export projections for soybeans in the Friday reports.
“So far this crop year, the U.S. has sold 86% of its estimated yearly exports already,” he said. “Exports are 17% ahead of a year ago, a record pace,” well ahead of the U.S.D.A.’s projection that exports of soybeans would be only 4% higher in the current crop year.