Soybean prices look placed for an autumn lull before a run
up to a "peak" next year, after a run on new-crop supplies depletes
inventories, US Department of Agriculture officials said.
The USDA said that soybean prices could fall to a "seasonal
price low" in the autumn, "provided that foreign crops do not run into major
Many analysts have flagged the pressure on prices from the current
harvest, expected to remain in full swing until late October, but also the
growing concerns of dryness in Brazil as growers start sowing their main soybean
And even immediately after harvest, "prices will be
moderated by the portion of the crop that was sold forward last spring, when
values were much lower than they are now, near $17 per bushel", the USDA report
'Price averages will
However, prices look set to recover when this coverage from
forward sales runs low.
"Monthly price averages will strengthen once farm deliveries
are predominantly cash sales," the briefing said, adding that "the price peak
will come when there are fewer supplies available for sale".
The USDA foresaw a "sharp reduction in stocks" by March
2013, when the "escalating cost of soybeans and weakening support for soymeal
values could make [soybean] crushing margins quite low".
Tightness in the soymeal market will be relieved by cuts to
hog and poultry herds.
Export sales will also "undoubtedly" slow from a strong
start to 2012-13 "once the sharp price increases are fully realised".
The comments came as the USDA expanded on reasoning behind oilseed
crop estimate revisions on Wednesday, when it cut its forecast for the domestic
soybean crop by 58m bushels to 2.63m bushels, a bigger downgrade than investors
"Despite crop improvement for the Mississippi Delta and south
east regions this year, a calamitous drought in the west Corn Belt continues
unabated," the USDA said.
However, the briefing failed to shed light on doubts over
the department's methodology in its latest revisions, which have led some
brokers to believe that even the downgraded US soybean forecast may be an
While the USDA's harvest forecast factored in lower pod
count, it used average pod weights, traders said.
'Lot of concern'
Darrell Holaday at broker Country Futures said that there
was "still a lot of concern about soybean yield as there is more talk
about USDA using a pod weight in yesterday's number that is actually above the
"That just seems unlikely given the overall condition
of the crop."
Benson Quinn Commodities said that the methodology "is
leading many to believe bean yield and production will decline further on lower
pod weights" in the October Wasde report.