June 3, 2016
Source: Syngenta Canada
The big rally in soybean prices has likely done the job of swinging some intended U.S. corn acres over to soybeans instead, according to market analysts at Doane Agricultural Services.
In a webinar late last week, Donae feedgrain analyst Marty Foreman pegged 2016 American corn planted area at 92.8 million acres, down from the surprisingly high 93.6-million acre estimate that was contained in the USDA’s March 31 Prospective Plantings report. At the same time, Doane soybean analyst Bill Nelson suggested 2016 soybean planted area will settle out at 83.2 million, up about 1 million acres from the USDA’s March report.
As the chart below shows, soybean futures have moved sharply higher since early March, actually hitting a two-year high on Thursday when the nearby July contract closed 44 ½ cents higher at $11.44 ½. Most of the gains have been attributed to excessively wet weather in Argentina during April, which dramatically slowed that country’s soybean harvest and raised questions about crop quality. Any shortfall in Argentina soybean production is expected increase demand for American supplies, thus sending prices higher.
As soybean futures took off, Foreman noted the soybean-to-corn price ratio surged from a low of 2:1 this past September to 2.7:1 by early May. The ratio - which has ranged from anywhere less than 2:1 to more than 3:1 over the past number of years - typically swings in favour of planting soybeans over corn anytime it exceeds 2.3:1.
“The market is really trying to encourage farmers to plant more soybeans,” Foreman said.
The USDA is due to release an updated 2016 acreage report on June 30.
With a planted area of 83.2 million acres and average summer weather resulting in a yield of 46.5 bu/acre, Nelson estimated 2016 U.S. soybean production at 3.82 billion bu and new-crop soy ending stocks at 315 million bu. In its first supply-demand estimates for the 2016-17 crop year, (using its planted area estimate of 82.2 million acres), the USDA pegged the average yield at 46.7 bu/acre, production at 3.8 billion bu and ending stocks at 305 million bu.
As for corn, Foreman used his planted area estimate of 92.8 million acres and an average yield of 167 bu/acre to arrive at production of 14.01 billion and ending stocks of 1.95 billion. That compares to the May USDA estimate of 93.6 million acres, a 168 bu/acre yield, production of 14.43 billion and ending stocks of 2.15 billion.
July soybeans: source - Barchart
Source: DePutter Publishing Ltd.
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