May 17, 2012
US soy plantings likely higher than expected
A senior agricultural economist said Tuesday (May 15) that US soy plantings will likely be much higher than initial expectations which may damp prices later in the year.
Farmers are planting more soy in part due to strong prices, but also because the wheat harvest is running ahead of schedule, creating a time window that is wide enough to allow for planting acreages to soy once wheat fields are stripped, Jay O'Neil, a senior agricultural economist with Kansas State University, said ahead of an international grains conference in Singapore organised by the American Soy Association-International Marketing.
Higher soy acreage and output is critical to boosting supply, which has become very tight due to drought in South America, pushing prices to four-year highs.
The USDA has forecast US soy plantings around 73.9 million acres this year, down from 75 million acres in 2011, but this could rise to nearly 76.5 million acres if O'Neil's estimate of an additional 2.0 million-2.5 million acres due to double-cropping is realised.
Nevertheless, soy prices may continue to rise until the harvest starts in September, with a significant decline likely thereafter, he said. Importers should limit their purchases to a bare minimum until the next US crop is harvested, he said, as global supplies will likely be ample by that time.
"Old-crop soys are still very volatile, and there is potential for higher prices to occur due to consistent buying by China and lowering of the South American production estimate at regular intervals," he said.
The July soy futures contract on the Chicago Board of Trade, which rose to a four-year high above US$15 a bushel two weeks ago, settled US$0.26 higher US$14.13 a bushel Tuesday.
"We may not have seen the highs yet, but if weather continues to be favourable in the US, prices will start to fall as the harvest approaches," O'Neil said.
In terms of demand, top importer China will likely import 58 million tonnes of soy in the marketing year that began October 1, up 11% from 52.34 million tonnes in 2010-11, the state-backed China National Grain and Oils Information Centre said in a report Wednesday.
The CNGOIC revised its 2011-12 forecast from 55 million tonnes in April and put 2012-13 imports around 60 million tonnes. The USDA last week put China's 2011-12 soy imports at 56 million tonnes and imports for 2012-13 at 61 million tonnes.