March 30, 2004

 

 

Record US Soybean Plantings Expected

 

The United States should expect to see record soybean plantings this spring as soybean prices surge to 16-year highs amid rising demand domestically and globally.

 

"Although soybeans will need to compete with corn for acreage, we expect additional (U.S.) soybean plantings to come from cotton, wheat, oats, additional double-cropped acreage, hay and land that was left fallow last year," said Anne Frick, oilseed analyst at Prudential Securities.

 

On Wednesday at 7:30 a.m. CST (1330 GMT), the U.S. Department of Agriculture will release its annual U.S. planting intentions report, along with its quarterly stocks data showing the amount of U.S. soybeans on hand as of March 1.

 

Analysts forecast U.S. 2004 soybean plantings at 74.508 million acres, above 2003 seedings of 73.404 million and the 2000 record of 74.3 million acres.

 

March 1 U.S. quarterly soybean supplies were forecast at 867 million bushels, well below last year's 1.201 billion bushels. That would be the smallest supply since 1977.

 

CBOT soybean futures rallied last week to $10.63-3/4 per bushel, the highest level since June 1988, on worries that strong demand was drawing down already tight U.S. soybean stocks.

 

Global soybean demand has grown over the last 10 years at an average annual rate of 5.3 percent. Soybean supplies in the United States, the largest global soy producer, are expected to fall to a 27-year low of 125 million bushels by Sept. 1.

 

Adding to the soy supply worries are cuts in South American soybean crops due to poor growing weather and crop diseases.

 

"The lower the South American crop goes, the larger the U.S. crop needs to be to adequately cover first-half usage and leave minimum carry-over stocks," Frick noted.

 

Still, many analysts noted that the market may have priced in the strong demand/small supply situation, and that the run-up may have left prices vulnerable to a bearish surprise on Wednesday.

 

"If the bean or corn estimate comes out near the high end of the error range, the market is not going to like it very much because we're probably trading U.S. carry-over (ending stocks) on the beans down near 100 million bushels," said Sid Love of Kropf & Love Consulting.

 

At midday Monday, Chicago Board of Trade soybean futures for May delivery were down 3 cents at $10.10 per bushel, while new-crop November soybeans were down 5-1/2 cents at $7.62.