Urbana, Illinois
February 9, 2009
Although a number of factors
continue to influence corn and soybean prices, one of the most
important recently involves weather and crop conditions in South
America, said a University of
Illinois Extension marketing specialist.
"This is particularly true for Argentina," said Darrel
Good.
Argentina and Brazil are large exporters of soybeans and soybean
products. Argentina is typically a large exporter of corn.
Recently, Brazil has also exported large quantities of corn as
production has exceeded domestic requirements.
"The size of those crops then has the potential to influence the
export demand for U.S. corn and soybeans," he noted.
Last month, the USDA estimated the potential size of the 2009
Argentine soybean crop at 1.82 billion bushels. That estimate is
about 120 million bushels larger than the 2008 crop, reflecting
an 8 percent increase in acreage.
"The estimate, however, is about 37 million bushels smaller than
the December estimate," he said. "It is generally expected that
the actual size of the crop will be well below the January
estimate, even with late-season rain in some areas.
"Private estimates of the crop vary widely, but are generally in
a range of 150 t0 200 million bushels smaller than the January
estimate. While Argentina could reduce year-ending stocks of
soybeans due to a small crop, exports of soybeans and soybean
meal might also have to be reduced below current forecasts."
The USDA has estimated the size of the 2009 Brazilian soybean
crop at 2.17 billion bushels, about 75 million bushels smaller
than the 2008 harvest due to slightly lower average yields and
unchanged acreage.
"Weather has been a bit more favorable in Brazil, although
late-season dryness did occur in some areas," Good noted.
"Production may fall a bit short of the current projection, but
quantities available for export are not likely to be
significantly reduced."
In its January report, the USDA estimated corn production
potential in Argentina at 650 million bushels, 60 million
smaller than the December estimate and 170 million smaller than
the 2008 harvest.
"While Argentina is not a large corn producer, much of that
production is exported in most years," he said. "Last year,
Argentina exported 590 million bushels of corn. The USDA's
current projection for this marketing year is 355 million
bushels.
"Both the production and export projections are expected to be
lowered in the February reports."
Last month, the USDA estimated 2009 Brazilian corn production
potential at 2.03 billion bushels, 80 million bushels smaller
than the December estimate and 280 million smaller than the 2008
harvest. Brazilian corn exports for the current year were
projected at 375 million bushels, 100 million more than exported
last year.
"Any further reduction in the crop estimate may also result in a
smaller export forecast for the current year," he said.
As Good noted earlier this year, U.S. soybean export sales have
been very strong so far this year.
"That pace has begun to slow somewhat, as it typically does in
front of the South American harvest," he said. "At this juncture
there appears to be little risk of marketing year exports
falling short of the USDA's projection of 1.1 billion bushels as
South American production is threatened and China continues a
strong pace of buying.
"Weekly shipments remain very large."
Some improvement in the dismal pace of U.S. corn export sales
occurred in late January. Export sales exceeded 42 million
bushels per week in the final three weeks of January. Weekly
sales had not previously exceeded 38 million bushels and had
averaged only 17.3 million bushels per week from Oct. 23, 2008,
through Jan. 8, 2009.
"New sales need to average about 25 million bushels per week to
reach the USDA projection of 1.75 billion bushels for the year,"
Good said. "The pace of shipments still lags, however. Shipments
need to average about 36 million bushels per week to reach the
USDA projection.
"Weekly shipments have been above that level only three times
this year, the last being in early October 2008. Shipments since
December 2008 have been in the range of 22 to 33 million bushels
per week. The recent increase in sales suggests that the pace of
shipments will accelerate, but that has not yet occurred."
These problems have emerged n 2009 following record world
production of coarse grains, wheat, and soybeans in 2008.
"The most notable, as outlined here, is in South America, but
dry conditions have also been noted in parts of China and
Australia," Good said.
"Production issues will become increasingly important over the
next three months."
By Bob Sampson, University of
Illinois |
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