PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 10:37 GMT, Thursday, 27th Dec 2012, by Agrimoney.com
Soybean prices - will they set another record in 2013?

Soybean futures traced an epic journey in 2012, soaring to a record high in Chicago, for a spot contract, of $17.94 a bushel in September, when fears for the drought-hit US crop were at their height.

The oilseed subsequently showed a sharp decline, amid ideas that the US crop had not been quite as poor as feared.

The decline was fuelled later on in the year by improvements in South American sowing conditions and by concerns for Chinese demand, after the cancellation of close to 1m tonnes of orders from the US.

Even so, prices look on course to end the year some 20% higher than they started.

Will the oilseed hold its gains in 2013, or will the negative factors depressing values continue to weigh? Leading banks give their forecasts.

Commerzbank

"Unlike in the case of wheat and also corn, a deficit is not expected for the soybean market in the 2012-13 season, but a moderate overhang of 8m tonnes.

Commerzbank soybean price forecasts

Q1 2013: $14.50 a bushel

Q2 2013: $14.25 a bushel

Q3 2013: $14.00 a bushel

Q4 2013: $13.50 a bushel

2013 average: $14.10 a bushel

Forecast for quarter-average price, Chicago front futures contract

"That said, this expectation is based on the hope that the next harvests in South America will be very high and reduced international stocks after the high deficit in the season before can be replenished at least to some extent. "High prices have in fact given growers an incentive to extend acreage significantly. However, especially in Argentina, the sowing process was delayed and hindered by heavy rainfall and conditions in Brazil were too dry for the sowing process that is now drawing to a close.

"The demand for soybeans remains very strong, also from major consumer China, whose imports should exceed the 60m-tonne mark for the first time ever this season.

 "Although risks remain, we expect the market situation to relax and soybean prices to fall to $13.50 a bushel by the fourth quarter 2013."

Goldman Sachs

"The key to soybean prices remains the transition from the current strong US export pace to the South American export ramp-up in February-March.

Goldman Sachs soybean price forecasts

Three-month horizon: $16.50 a bushel

Six-month horizon: $15.50 a bushel

12-month horizon: $13.50 a bushel

Forecasts: Chicago front futures contract

"Disappointing weather conditions during South American planting create risks that harvest and exports are delayed, pushing US stocks lower and prices sharply higher.

"Net, while we have more confidence in a rally in corn prices, we still view soybeans has having a larger upside potential.

"Barring further deterioration in South American weather in December-January, the large ramp-up in local exports from April on will likely bring soybean prices to underperform corn prices, although downside to prices will be limited by the need to secure sufficient acreage in the US next spring.

"Average weather conditions in 2013 would also bring a large supply response in the US and bring prices sharply lower in the second half of 2013."

Macquarie

"We expect world soybean supplies to increase in the 2013-14 season, this will naturally allow prices to reduce from the historically high levels which we have be seen this season.

"We do though see soybeans as the relative outperform of the complex, as the increase in supplies will be far smaller in comparison to the shift we expect in corn.

"We expect soybean area to increase in the 2013-14 season at the expense of corn. We do note, though, a large portion of the area expansion will come from double-crop soybeans, which naturally have a much lower yield expectation.

"We forecast US soybean trend yields at 43.8 bushels per acre in the 2013-14 season.

"Increased area and improved yields will see a sizable gain in production to 3.43bn bushels. This growth will though be nearly matched by improved demand. This combination will hold soybean ending stocks at relatively low levels."

Morgan Stanley

Strong global demand growth for soy products in 2013 and risks to South America's 2012-13 soybean production increase the urgency of adding US, Brazilian and Argentine acreage in 2013-14.

Morgan Stanley soybean price forecasts

2012-13: $15.70 a bushel

2013-14: $14.50 a bushel

Forecast for season-average price, Chicago front futures contract

"Soybean prices need to rise in order to gain this acreage in the face of rising South American costs and high corn prices.

"Near-record-low stocks in the western hemisphere and strong global demand requires aggregate Brazilian, US and Argentine acreage to growth by 4% year on year [for 2013-14].

"Assuming trend growth in demand, global imports will need to rise by an estimated 9% year on year.

"In South America, rising production costs are lifting the expansion incentive price, supporting for 2013-14 soybean prices. Rising labour, fertilizer and particularly transportation costs continue to drive up the price necessary to incentivise additional expansion -now seen at nearly $14.50 a bushel."

Rabobank

"Soybean prices are expected to remain supported in the first quarter of 2013 on tight export supplies before declining as production rebounds later in the year, with prices for the year averaging below 2012 levels.

Rabobank soybean price forecasts

Q1 2013: $14.75 a bushel

Q2 2013: $14.00 a bushel

Q3 2013: $13.50 a bushel

Q4 2013: $13.00 a bushel

Forecast for quarter-average price, Chicago front futures contract

"Although we expect record-large South American production will come online in the second half of 2012-13, and result in lower prices in 2013, we believe prices will rebound from current levels until this crop is available in March."It will likely take multiple seasons to replenish global soybean supplies to adequate levels, as weather and capacity constraints continue to hinder production.

"Corn is forecast to continue winning the battle for acreage in the US, which will result in only a modest expansion in Northern Hemisphere soybean output [in 2013].

"Seemingly inelastic demand from China will increasingly price other major importing countries out of the market, and will also result in historically-high floor prices for international soybean values."

Saxobank, among its "outrageous predictions for 2013"

"Soybeans to rise by 50%.

"Bad weather during 2012, which wreaked havoc on global crop production and saw a nine-year low in US soybean ending stocks, leaves the price of new crop soybeans exposed to any new weather disruptions, either in the US, South America or in China.

"Increased demand for biofuel will also play its part in exposing the price to spikes, and speculators will be ready to re-enter the market, pushing the price higher by as much as 50%.

"Food security becomes a buzz phrase."

Gary Schnitkey, Department of Agricultural and Consumer Economics, University of Illinois

"Market-year-average prices are national, cash price farmers receive for corn from the months of September to the following August.

"These market-year-average prices are compared to average settlement prices for the December Chicago futures contracts in the December prior to expiration. These futures prices serve as a way of predicting the market-year-average prices.

"Chicago futures prices suggest that market-year-average soybean prices for 2013 will be near $13.00 per bushel.

"Obviously, prices could vary from $13.00. Historical price changes suggest there is an 11% chance of the market-year-average price being below $10.00 and a 19% chance of market-year-average price being below $11.00 per bushel."

Societe Generale

"Soybean prices remain vulnerable to shortfalls in South American production.

SocGen soybean price forecasts

Q1 2013: $15.49 a bushel

Q2 2013: $14.81 a bushel

Q3 2013: $14.15 a bushel

Q4 2013: $13.80 a bushel

2013 average: $14.56 a bushel

Forecast for quarter-average price, Chicago front futures contract

"At present, we note both the above-average US soybean export inspections and lower US soybean export sales. This is logical, in our view, as end-users were quick to book future supplies ahead of an uncertain US harvest.

"However, as US production numbers are now trending a bit higher than initially expected, the global market is likely expecting that the US can help close the gap between now and the next South American harvest."

RELATED ARTICLES
Cocoa prices - can they maintain their recovery in 2013?
Soymeal prices - has their correction gone far enough?
Wheat prices - will they outperform again in 2013?
Cattle prices - will 2013 bring a fifth year of gains?
Cotton prices - will they fall further in 2013?
Corn prices - can they stay high in 2013?
Soyoil prices - one factor is to play a key role in 2013
Arabica coffee prices - will they heat up in 2013?
Hog and pork markets - will prices rise for a sixth year?
Sugar prices - will they pull out of their downturn in 2013?
LINKS
Agricultural Commodities
Agricultural Markets
Agricultural Companies
Agricultural Events