Macquarie cast a cloud over a revival in soybean prices by
stating a "bearish view" on prospects, even as it revealed "a bullish
expectation for corn prices", citing the impact of South American dynamics.
Soybean prices set course on Wednesday for their first gains
in seven sessions in Chicago, adding 0.7% to $14.16 ˝ a bushel as of 07:00
local time (12:00 UK time) for May delivery, amid renewed talk of the tightness
However, Macquarie, which has forecast futures falling to
average $13.00 a bushel in the April-to-June period, said that South American
crops, "will pressure prices from current levels".
"On a three-to-six month basis, we have a general bearish
view on soybeans."
The forecast reflected an assessment that Brazil's ports -
whose hold-ups have pushed importers back to the US - will prove able to meet
world needs it estimated at 5.5m tonnes a month for soybeans and 1.5m tonnes
for soymeal until August, when the world prepares for the American harvest.
Brazil's harvest - which Macquarie pegged at 81m tonnes, 2.5m
tonnes below the US Department of Agriculture estimate –would this year prove
more evenly spread geographically, allowing Brazil to make more use of the southern
port of Rio Grande.
"One of the most important changes this season is the
improvement in the soybean crop in Rio Grande do Sul," Macquarie analyst Chris
Gadd said, estimating the state's harvest at 12m tonnes, nearly twice last
season's drought-hit 6.5m-tonne result.
Meanwhile, in Argentina, farmers will prove more willing
than has been thought to sell soybeans, despite the appeal of hanging on to a
dollar-denominated asset at a time of a depreciating peso.
"Through the use of silo bags the Argentine farmer may well
have the physical ability to store all of their crop, but we believe the
constraint is actually a financial one," Mr Gadd said.
"Of the major producing nations Argentine farmers are
relatively poor at present - this stems from the combination of government
price caps and low production over the last couple of seasons.
"We simply don't believe the Argentine farmer has the
available credit to finance the storage of millions of tonnes of soybeans," Mr
Gadd said, foreseeing that "come harvest they will be aggressive sellers of the
crop from the combine".
However, for corn, pressure on prices from the Argentine harvest
looks like being less acute, given the degree of selling that farmers have
Growers have sold ahead nearly 12m tonnes out of a crop Macquarie
pegged at 24.9m tonnes.
Meanwhile, expectations of strong Brazilian corn exports from
July, once the second or safrinha crop comes onstream, look misplaced given the
competition with other crops for port capacity, and the prospect of
"A huge Brazilian Safrinha crop doesn't seem the certainty
that it once was," Mr Gadd said, raising the late plantings in Mato Grosso as a
"significant threat to yield", in increasing the chances of the crop pollinating
during the height of the dry season.
The bank forecast the safrinha corn crop at 34.7m tonnes, down
10.1% year on year.
Range of estimates
The estimate for the Safrinha crop contrasts with a forecast
of 40.0m tonnes earlier this week from Safras, the Brazilian consultancy, which
pegged Brazil's total corn harvest at 77.34m tonnes.
Macquarie pegged the overall crop at 69.1m tonnes.
Separately on Wednesday, Lanworth trimmed its estimate for the
crop by 500,000 tonnes to 76.4m tonnes.