Planting Problems, Weather Could Still Impact Soybean Outlook
Planting is lagging, but no changes forecasted to acreage… yet
David Asbridge operates NPK Fertilizer Advisory Service, an independent consulting firm that covers the crop and fertilizer markets, both domestically and globally.
So far, 2011 has been a relatively challenging year for U.S. agriculture. Many parts of the western United States have been too dry while parts of the upper and eastern Soybean Belt have been too wet. Planting of the spring crops is behind in most areas as farmers are having trouble getting in the saturated fields to get their fertilizer applied and their seed in the ground. State extension services are telling farmers that it is not yet time to panic and start changing their cropping plans, but that time may get here before they get the earlier crops planted. The largest switch in a situation like this is usually from corn to soybeans. The U.S. Department of Agriculture’s (USDA’s) March Prospective Plantings report discussed in last month’s column showed that farmers expected to plant 92.2 million acres of corn and 76.6 million acres of soybeans. At the current time, those numbers are still possible, but the clock is ticking and the rain clouds are still forming, especially across the eastern Soybean Belt.
These possible changes, however, do not keep forecasts from being made. The USDA has issued its first forecasts for the 2011 spring crops in its World Agricultural Supply and Demand Estimates report, and there were a few surprises in the report as it relates to soybeans. Based on the Prospective Plantings report, USDA used 76.6 million acres to be planted. It will update that figure in its June 30 Acreage report based on farmer surveys around the first of June. Of course, that number could still be suspect, because mid-June is the date that many farmers would consider switching to soybeans if they don’t have their corn planted. If this is perceived to be a large problem, USDA might do another survey in July and change its acreage figure again in the July or August estimates. The 2011 acreage number is down about 800,000 acres from the 2010 level and just under a million acres less than the record set back in 2009.
Using the current acreage estimate, USDA calculated that this level of planted acreage would equate to about 75.7 million acres harvested for soybeans. This is based on a normal abandonment rate of just over 1 percent. With the possibility of the crop being late this year and the flooding that is prevalent in many areas, the abandonment rate may need to be adjusted upward later on this year. The estimated yield was set at 43.4 bushels per acre. This is basically the trend yield calculated from yield data over the past 20 years, with no adjustments for late planting, at least not yet. This yield figure is almost identical to 2010’s current estimate of 43.5 bushels per acre and is just short of the record 44-bushel rate from 2009. But remember that 2009 also started out late and was still able to reach a record yield. It just goes to show that late planting does not always mean lower yield, because summer weather will also be extremely important once the crop finally gets planted.
The 2011 acreage and yield combination would mean production of 3.29 billion bushels. This would be 44 million bushels, or about 1.3 percent less than the current 2010 estimate. It would also be 2.2 percent less than the record production in 2009. With the tight carryout stocks from the 2010 crop, the total supply for the 2011 crop year would be 3.47 billion bushels. This would be less than the previous two years and will precipitate some cuts in usage.
Soybean crush is forecast to increase only slightly, to 1.65 billion bushels. This is still well below the 2009 level and 2006’s record 1.81 billion bushels. The largest factor in the continuing slowdown in crush is the declining export market for meal and oil. With a record crop in Brazil this year, the U.S. exports of both meal and oil will be down from the peaks reached during the 2009 crop year when both Brazil and Argentina had drought-reduced soybean crops and customers moved their purchases to the United States. One offsetting factor in the decline in soybean oil exports will be a resurgence in the demand for soybean oil for biodiesel production. With the reinstatement of the biodiesel blenders’ credit, soybean oil use in 2011 for biodiesel production is expected to jump to 3.5 billion pounds, a billion-pound increase over the 2010 estimate and more than double the level in 2009 when the credit was eliminated.
Exports of raw soybeans in 2011 are also expected to be down for the same reason as meal and oil, although the decline is expected to be relatively small. USDA expects Brazil and Argentina to both have large crops this coming year, which will cut into the U.S. export opportunities. There is also some concern right now that economic changes being made in China could hurt their potential imports this year, but USDA still expects them to import a record 2.13 billion bushels during this coming crop year. Other major importers, such as the European Union, are expected to cut imports this coming year. Overall, this is expected to cause U.S. exports to fall from this year’s record 1.55 billion bushels to 1.54 billion in 2011.
These changes are expected to cause stocks at the end of the 2011 crop year to fall from current estimates for the 2010 crop year. USDA expects stocks to be 170 million bushels at the end of 2010. Although this is an increase from the 151 million bushels at the end of the 2009 crop year, it is still relatively tight. For 2011, they expect ending stocks to fall to 160 million bushels. This would mean another year of relatively high prices because the market would have to continue to ration supplies. USDA’s price forecast ranges from $12 to $14 per bushel. The midpoint forecast of $13 would be a new record level, easily surpassing the 2010 estimate of $11.40 per bushel.
As mentioned above, continuing planting problems and summer weather can still have a big impact on soybean production and prices this year. Come back next month as we continue to update the planting and production forecasts and see how that might influence prices as we move through the year. See you next month!
Planting Problems, Weather Could Still Impact Soybean Outlook
Planting is lagging, but no changes forecasted to acreage… yet
May 23, 2011
David Asbridge operates NPK Fertilizer Advisory Service, an independent consulting firm that covers the crop and fertilizer markets, both domestically and globally.
So far, 2011 has been a relatively challenging year for U.S. agriculture. Many parts of the western United States have been too dry while parts of the upper and eastern Soybean Belt have been too wet. Planting of the spring crops is behind in most areas as farmers are having trouble getting in the saturated fields to get their fertilizer applied and their seed in the ground. State extension services are telling farmers that it is not yet time to panic and start changing their cropping plans, but that time may get here before they get the earlier crops planted. The largest switch in a situation like this is usually from corn to soybeans. The U.S. Department of Agriculture’s (USDA’s) March Prospective Plantings report discussed in last month’s column showed that farmers expected to plant 92.2 million acres of corn and 76.6 million acres of soybeans. At the current time, those numbers are still possible, but the clock is ticking and the rain clouds are still forming, especially across the eastern Soybean Belt.
These possible changes, however, do not keep forecasts from being made. The USDA has issued its first forecasts for the 2011 spring crops in its World Agricultural Supply and Demand Estimates report, and there were a few surprises in the report as it relates to soybeans. Based on the Prospective Plantings report, USDA used 76.6 million acres to be planted. It will update that figure in its June 30 Acreage report based on farmer surveys around the first of June. Of course, that number could still be suspect, because mid-June is the date that many farmers would consider switching to soybeans if they don’t have their corn planted. If this is perceived to be a large problem, USDA might do another survey in July and change its acreage figure again in the July or August estimates. The 2011 acreage number is down about 800,000 acres from the 2010 level and just under a million acres less than the record set back in 2009.
Using the current acreage estimate, USDA calculated that this level of planted acreage would equate to about 75.7 million acres harvested for soybeans. This is based on a normal abandonment rate of just over 1 percent. With the possibility of the crop being late this year and the flooding that is prevalent in many areas, the abandonment rate may need to be adjusted upward later on this year. The estimated yield was set at 43.4 bushels per acre. This is basically the trend yield calculated from yield data over the past 20 years, with no adjustments for late planting, at least not yet. This yield figure is almost identical to 2010’s current estimate of 43.5 bushels per acre and is just short of the record 44-bushel rate from 2009. But remember that 2009 also started out late and was still able to reach a record yield. It just goes to show that late planting does not always mean lower yield, because summer weather will also be extremely important once the crop finally gets planted.
The 2011 acreage and yield combination would mean production of 3.29 billion bushels. This would be 44 million bushels, or about 1.3 percent less than the current 2010 estimate. It would also be 2.2 percent less than the record production in 2009. With the tight carryout stocks from the 2010 crop, the total supply for the 2011 crop year would be 3.47 billion bushels. This would be less than the previous two years and will precipitate some cuts in usage.
Soybean crush is forecast to increase only slightly, to 1.65 billion bushels. This is still well below the 2009 level and 2006’s record 1.81 billion bushels. The largest factor in the continuing slowdown in crush is the declining export market for meal and oil. With a record crop in Brazil this year, the U.S. exports of both meal and oil will be down from the peaks reached during the 2009 crop year when both Brazil and Argentina had drought-reduced soybean crops and customers moved their purchases to the United States. One offsetting factor in the decline in soybean oil exports will be a resurgence in the demand for soybean oil for biodiesel production. With the reinstatement of the biodiesel blenders’ credit, soybean oil use in 2011 for biodiesel production is expected to jump to 3.5 billion pounds, a billion-pound increase over the 2010 estimate and more than double the level in 2009 when the credit was eliminated.
Exports of raw soybeans in 2011 are also expected to be down for the same reason as meal and oil, although the decline is expected to be relatively small. USDA expects Brazil and Argentina to both have large crops this coming year, which will cut into the U.S. export opportunities. There is also some concern right now that economic changes being made in China could hurt their potential imports this year, but USDA still expects them to import a record 2.13 billion bushels during this coming crop year. Other major importers, such as the European Union, are expected to cut imports this coming year. Overall, this is expected to cause U.S. exports to fall from this year’s record 1.55 billion bushels to 1.54 billion in 2011.
These changes are expected to cause stocks at the end of the 2011 crop year to fall from current estimates for the 2010 crop year. USDA expects stocks to be 170 million bushels at the end of 2010. Although this is an increase from the 151 million bushels at the end of the 2009 crop year, it is still relatively tight. For 2011, they expect ending stocks to fall to 160 million bushels. This would mean another year of relatively high prices because the market would have to continue to ration supplies. USDA’s price forecast ranges from $12 to $14 per bushel. The midpoint forecast of $13 would be a new record level, easily surpassing the 2010 estimate of $11.40 per bushel.
As mentioned above, continuing planting problems and summer weather can still have a big impact on soybean production and prices this year. Come back next month as we continue to update the planting and production forecasts and see how that might influence prices as we move through the year. See you next month!