December 12, 2003
US Soybean Prices Highest Since Late 1990s
The US government said yesterday that soybean farmers in the country will pocket the highest prices for their harvest since the halcyon days of the late 1990s, thanks to a voracious world appetite led by China, for the versatile oilseed.
This year's drought-stunted crop will fetch an average $7.25 a bushel, the highest since 1996/97, the Agriculture Department said. Its figure suggested market prices will remain high for months as exporters, foodmakers and livestock feeders scuffle for a shrinking supply of soybeans.
"Ten dollars (a bushel) is not out of the question," said analyst Emily French of the consulting firm World Perspectives. "They could hit double digits."
In a monthly look at crops worldwide, USDA said U.S. corn (maize) and wheat prices would be the highest since 1997/98, thanks to larger exports. Soybean oil prices would be the highest in nine years.
The late 1990s were euphoric times for growers as stockpiles ran low around the globe and prices soared. They crashed with the return of abundant crops at the end of the decade.
Without abundant crops in Brazil and Argentina, soybean prices could show "spectacular" increases, said private consultant John Schnittker. South America grows nearly half of the world's soybeans and the United States one-third.
USDA figures show huge demand for U.S. soybeans rapidly consuming this year's 2.452 billion-bushel (66.73 million-ton) crop, the smallest since 1996.
Some 711 million bushels (19.4 million tons) of soybeans, nearly 30% of the crop, were sold for export since harvest began, a heady 80% of USDA's export forecast for the entire marketing year. With strong domestic demand, the soybean stockpile would shrink to a scant 125 million bushels (3.39 million tons) -- an 18-day supply -- before the 2004 crop is ready for harvest next summer.
Soybeans are popular in livestock rations as well as a widely used ingredient in food. There is also a fledgling industry that uses soybeans to make biodiesel fuel.
Even with a dwindling stockpile, "I don't know of a circumstance where we would embargo," Agriculture Secretary Ann Veneman said in a Reuters interview on Tuesday.
USDA estimated Argentina would grow 36.5 million tons, or 1.34 billion bushels, this season, 1.5 million tons less than forecast a month ago due to lower yields. Brazil would grow a record 60 million tons, or 2.2 billion bushels.
Brazil estimates its crop at 58.76 million tons, or 2.156 billion bushels, Agriculture Minister Roberto Rodrigues said on Thursday, an increase from October. He said the forecast was conservative.
"Conab is cautious due to lack of rain," Rodrigues said, referring to Brazil's crop supply agency.
Soy plantings in Brazil are up 13% from last season, to 20.94 million hectares, or 51.7 million acres.
South America harvests soybeans in February and March.
"I think January through March will be awfully painful," for U.S. firms needing to buy soybeans, analyst French said.
China was forecast to import a record 22 million tons of soybeans, including several million tons from the United State, to feed its hog, poultry and aquaculture industries.
At midday, soybean futures prices were down sharply at the Chicago Board of Trade. Soybeans for delivery in January sold for $7.69 a bushel, down 18 because last week's export sales were smaller than expected. USDA issued its weekly export sales report on Thursday.
March corn sold for $2.47-3/4 a bushel, down 2 cents. March wheat was down 18-1/2 cents, to $3.88 a bushel, following word China bought 500,000 tons of wheat from Canada, dashing hopes for a large U.S. sale.