The soybean market stands on the verge of an upheaval which
Oil World said will be marked by a "price setback", while US farm officials defined
it in terms of a collapse in processing margins.
Oil World, the analysis group, said that values prices may
have another month of support from Brazil's logistical hiccups before suffering
a "setback" encouraged, ironically, by the impact of high values in
incentivising US farmers to plant the oilseed.
Soybean prices "may remain firm in March, and perhaps the first
half of April", thanks to the loading delays of up to 60 days at Brazilian ports
which are encouraging buyers to pay up for what supplies are available, largely
from the US.
"Manifold logistical problems kept Brazilian soybean exports
below the world market's requirements in February and this will probably also
occur in the first half of March," Oil World said.
However, by mid-April, "exports from South America should be
in full swing and the US Department of Agriculture planting intentions report
may have confirmed the outlook for a record soybean acreage this spring, paving
the way for a price setback", Oil World said.
The USDA will at the end of this month unveil its first
estimates for domestic plantings, with the resilience - until this week – of soybean
prices compared to corn, the major rival in spring seeding programmes, seen encouraging
growers to prioritise sowings of the oilseed.
"The severe depletion of US stocks and the recent price
development is signalling US farmers to step up soybean plantings," Oil World
said, estimating area potentially at a record 78m-79m acres, up from 77.2m
acres last year.
Separately, the USDA forecast that the soybean market faces
a tipping point when lower prices of soyoil and soymeal, the main products from
processing soybeans, prompt a collapse in crushing activity.
"It may not be long before the market sees a considerable
weakening of crush margins," USDA analyst Mark Ash said, in follow-up comments
to the department's benchmark Wasde crop report on Friday.
With the US requiring a "severe rationing of soybean stocks"
- after robust demand in the first half of 2012-13, despite the season's
drought-reduced crop - "an unavoidably sharp reduction in February-to-August
use is anticipated".
US stocks have already fallen to their lowest since 2004, "yet
must still support the domestic market until the next harvest in six months",
Mr Ash said.
"Any additional export sales commitments of soymeal this
spring could be worsening a domestic shortage by the summer," and mean "unusually
large" imports of the feed protein source from Brazil.
The comments come amid a setback in soybean prices, which for
May delivery closed 0.7% lower at $14.67 ½ a bushel in Chicago on Tuesday, in
part of fears for the longevity of the Brazilian logistical hiccups.
At Phillip Futures, Joyce Liu said: "For as long as the
Brazilian port delays last, we see more potential for upside in the old-crop
"But once the logistical issues are cleared, the sudden
influx of Brazilian soybeans may cause Chicago soybean prices to plunge."