June 20, 2012

 

Oil World sees reduced US, South American soy inventories

 

 

US soy inventories are expected to be greatly lowered until August due to strong export demand, while South American stocks are simultaneously being reduced, Hamburg-based oilseeds analysts Oil World said on Tuesday (June 19).

 

Oil World has cut its forecast of US August 31 soy inventories to 4.2 million tonnes from 4.6 million tonnes the analyst estimated in May and down from 5.85 million tonnes of US stocks on August 31, 2011.

 

"The global demand is now increasingly switching to the US, cutting US stocks to bare minimum levels as of end-August 2012," Oil World said. "The forthcoming huge increase in US exports of soy and soymeal may become a logistical nightmare in the next 6-7 months."

 

Oil World forecasts that US soy exports will rise by almost 40% in coming months as global demand moves to the US after poor soy crops in Brazil and Argentina.

 

"Considerably smaller South American supplies and larger than expected world import requirements raised the demand for US soy and products in May," Oil World said. "This trend is going to accelerate from June onward, resulting in significant on-year increases in US soy disposals."

 

Meanwhile, South American soy stocks are also being run down, it said.

 

In South America, this year's poor crop coupled with strong export demand has cut soy inventories sharply, Oil World estimates.

 

June 1 soy stocks in the five main regional exporters Argentina, Brazil, Paraguay, Bolivia and Uruguay fell to 72.36 million tonnes from 96.09 million tonnes on June 1, 2011, it estimates. Record Chinese purchases contributed to the fall, it said.

 

Argentina's June 1 soy stocks fell to 31.34 million tonnes from 40.32 million tonnes on June 1, 2011, it estimates. Brazil's stocks fell to 36.72 million tonnes from 48.90 million, it said.

 

Argentine and Brazilian farmers are likely to expand soy plantings at the expense of grains for their 2013 crop because of higher profits from the oilseed, Hamburg-based oilseeds analysts Oil World said on Tuesday (June 19).

 

"Farmers in South America are getting more enthusiastic about expanding soy cultivation, taking advantage of the comparatively lower production costs in relation to grains and favourable price prospects," Oil World said.

 

"Many of them have already started marketing their 2013 crops seven to nine months ahead of harvest in an effort to benefit from the current attractive prices."

 

The United States is the world's largest soy producer followed by Brazil and Argentina, but Argentina is the largest soymeal and soyoil exporter.

 

Argentine farmers are likely to plant 19.60 million hectares of soy for the 2012/13 crop for harvesting in early 2013, up from 18.53 million being harvested in 2012, Oil World estimated.

 

Argentine farmers are likely to reduce 2012/13 wheat plantings to 3.60 million hectares from 4.63 million this season, but also raise 2012/13 corn sowings to 5.10 million hectares from 4.96 million, it said.

 

"Under favourable weather conditions, the Argentine soy crop could reach a record 54.5 to 55.5 million tonnes in 2013," Oil World said.

 

Oil World repeated its forecast that Argentina's 2012 soy crop will fall to or slightly below 40 million tonnes.

 

The Argentine government estimates 41.5 million tonnes.

 

Brazilian farmers are likely to plant 26.40 million hectares of soy for harvesting in 2013, up from 25.04 million hectares harvested this year, Oil World said.

 

Brazil's farmers are likely to plant 14.40 million hectares of corn for the 2013 crop, down from 15.12 million hectares harvested this year, it said.

 

This year's Brazilian winter corn harvest is set to reach a record size, leading to a build-up of burdensome stocks despite high exports to China, and so reducing the attraction of the grain to farmers, it said.