The best thing about February, some people say, is that it
is only 28 days long.
Even for agricultural commodity watchers, the month's
edition of the Wasde report, the benchmark US Department of Agriculture crop
briefing series, has a reputation for being one of the more snoozy ones.
With estimates for the latest northern hemisphere harvests largely
sealed, and southern hemisphere ones not advanced enough to offer accurate
yield changes, it can offer little scope for changing production estimates.
And as for demand, one of the biggest influences here, the
latest US quarterly stocks report, is factored into January Wasdes.
sheet in history'
But the Wasde on Monday could nonetheless set a landmark.
"It could show the tightest balance sheet in history" for US
soybeans, said Don Roose, president of Iowa-based broker US Commodities.
Forecasts for 2013-14 soybeans in Wasde report, (existing figure)
US ending stocks: 143m bushels, (150m bushels)
Range of estimates: 125m-164m bushels
World ending stocks: 72.67m tonnes, (72.33m tonnes)
Range of estimates: 71.0m-75.35m tonnes
Which would, of course, imply soaring prices, were supplies
of soybeans, and other oilseeds, not ample elsewhere.
"Canada's canola stocks very large, and South American soybean
crops are expected to come in strong."
Still, the conundrum of thin US inventories compared with
strong foreign ones provides some scope for surprises.
The USDA analysts in charge of oilseeds estimates, "have a
real problem on their hands", said Bill Tierney, a former principal grains
economist at the USDA, now chief economist at AgResource.
"They have a record pace of soybean exports, soymeal
exports, already bigger than projections" for the whole of 2013-14.
But the estimate for stocks at the close of the season is
already somewhere near levels that many consider pipeline supplies, meaning
that an increase to the export estimate would require tinkering with other
numbers to make the balance sheet work.
This will likely mean reducing the amorphous "residual"
figure, currently at 22m bushels, but too much of a raise in the import figure
may be difficult given that, at 25m bushels (680,000 tonnes) it is already the
second highest in history.
The export issue has been made only stronger this week, with
the USDA on Thursday revealing weekly soybean export sales for 2013-14 of
577,000 tonnes, "up 59% from the previous week and 25% from the prior four-week
Forecasts for 2013-14 corn in Wasde report, (existing figure)
US ending stocks: 1.619bn bushels, (1.631bn bushels)
Range of estimates: 1.574bn-1.748bn bushels
World ending stocks: 159.60m tonnes, (160.23m tonnes)
Range of estimates: 156.27m-163.20m tonnes
Sales have now trenched 1.58bn bushels – 85m bushels above
the figure USDA analysts currently have pencilled in for the whole season,
which is less than half way through.
The cancellations by China, the top soybean importing
country, of US orders, given the ramp up of the harvest in Brazil and prospect
for a strong result, have signally failed to materialise as investors have
It creates a balance sheet puzzle investors are grappling
"The trade is understandably nervous over mounting US soy
sales and the lack of Chinese cancellations to date", said Richard Feltes at
broker RJ O'Brien.
Corn vs soybeans
Anne Frick at New York-based Jefferies Bache, came up with a
Solomon-like solution to an expectation that the USDA will raise its estimate
for US soybean exports by 20m bushels.
This will be balanced "with 10m bushels coming from an increased
import estimate, and 10m bushels coming from a reduction in ending stocks to
140m bushels", a historically low inventory figure when compared with demand
for the oilseed.
However, Rich Nelson proposed that there was still potential
for the USDA, with large Chinese cancellations still possible, to ignore the export
issue for now.
While an increase in the corn export number was "certain",
for soybeans it was just "likely".
'Offer a surprise'
Indeed, on corn, the USDA has much greater latitude, with
ample supplies to balance out strong US export sales, which came in strong
again last week at 1.70m tonnes, Thursday's data showed.
Forecasts for Wasde South American harvest estimates (existing figure)
Argentine corn: 23.82m tonnes, (25.0m tonnes)
Range of estimates: 19.8m-25.0m tonnes
Argentine soybeans: 54.13m tonnes, (54.5m tonnes)
Range of estimates: 52.7m-57.0m tonnes
Brazilian corn: 69.99m tonnes, (70.0m tonnes)
Range of estimates: 66.1m-74.0m tonnes
Brazilian soybeans: 89.76m tonnes, (89.0m tonnes)
Range of estimates: 88.3m-91.0m tonnes
The US has now sold 91% of the corn forecast for 2013-14,
less than half way through, and compared with an average of 65%, Benson Quinn Commodities
"That gives confidence to traders believing the USDA will
offer a surprise on Monday by taking the corn export estimate up more than the
50m bushels that is expected at this point," the Minneapolis-based broker said.
"Either way, the corn market is indicating it has value,"
even with futures prices around their highest in three months.
Not that all the US corn demand data are viewed as so strong.
The US corn feed estimate, of 5.3bn bushels, is a "very
large number", Mr Nelson said, up 22%, and a figure he felt certain to be
reduced given livestock dynamics implying fewer stomachs to fill than had been
Official data last week showed the US cattle herd at its
lowest in 63 years, and below market expectations.
And the spread of porcine epidemic diarrhoea virus (PEDv)
means that "hog number might stay equal with last year's and not increase as
was originally thought".
"But they will not change the feed number for
now," with amendments on this score are only likely on a future Wasde, after
insight from the next quarterly grains report.