US soybean inventories are set for a sharp drop despite
improving production hopes, Oil World said, even as a withdrawal of rains cut hopes for an early Brazilian harvest to loosen the world's tight supply chains.
The consultancy flagged the prospect of an upgrade to
potentially 75m tonnes (2.786bn bushels) in the US Department of Agriculture's
estimate for the domestic soybean harvest in the official Wasde crop report due
A crop of 75m tonnes would be in line with consensus
However, even this would not make-up for the strength of
demand, notably from importers of the oilseed, and top ranked buyer China in
particular, which have been forced to turn to the US for supplies following
drought-hit South American harvests.
Drop in inventories
"US soybean exports to China were unusually large for this time
of the year at roughly 2.5m tonnes in August and September but could not offset
the shortfall in exports from Brazil and Argentina," Oil World said.
"China recently started reducing its soybean stocks to
cushion the effects of lower imports."
"With the current working estimate of a US soybean crop of 75m
tonnes, US soybean stocks may have to be reduced to only around 27.5m tonnes as
of end-February 2013."
That would be a "multi-year low" for that time of year, half
way through 2012-13, and down from 40m tonnes as of the end of February 2012.
Rainy season timing
The forecast assumes that soybean exports from the three top-shipping
countries - Argentina, Brazil and the US – will hit 85.5m tonnes in the
September-to-February half, rationed lower from the 96.4m tonnes in the same
period of 2011-12.
Exports from this period will come overwhelmingly from the
US, with South American supplies running dry, and with hopes fading too for
Brazil's next harvest to begin early in 2013, and so give a timely boost to
A dearth of follow-on rains, after showers last month raised
hopes for an early sowings window, and so a prompt harvest, meant that it was "not
certain that the rainy season has arrived after all", Michael Cordonnier, at
Soybean and Corn Advisor, said.
"It's not uncommon for rains to back off again for a while."
Downgrade to average
The pattern meant that the sowing season, with some 5%
completed, was looking average, rather than better-than-average, as it had
appeared two weeks ago.
"We will have to go another couple of weeks without rain
before we think about any yield implications," Dr Cordonnier said.
However, the lack of rain was a setback to hopes for an
early harvest which, given the dearth of available supplies, with timing being
as closely monitored as yield expectations.
Soybeans vs corn
In fact, production ideas gained support on Tuesday when
Conab, the Brazilian crop bureau, pegged the domestic harvest at 80m-82.8m
tonnes a jump of up to 25% year on year, reflecting forecasts of a rise in
sowings and a return to average yields from last season's drought-hit crop.
A rise in seedings to 27.3m hectares, from 25m hectares last
season, "is due to excellent prices seen in the 2011-12 season that broke
historic records due to the drop in production in the main producing countries",
the bureau said.
The extra soybean area will come in part at the expense of
corn, for which plantings will drop by some 300,000 hectares to 14.9m hectares.
"Good soybean prices have wooed growers in all producing
states, even with strong prospects for production and trading of corn,"
Nonetheless, the crop, planted also as a follow-on after
soybeans as well as a main crop, will hit 71.9m-73.2m tonnes, in line with
2011-12's 72.6m tonnes.