Beans stage mini explosion
The market always had in the back of its mind the question “will Brazil be able to get the beans out the door?” This week the answer to the question is “not nearly quick enough” and it has caused a mini-panic. The Chinese came back from their week long holiday to buy soybeans from the US. Cash basis levels are rising and the export terminals along the PNW (Pacific Northwest) have record strong bids. Wait times to load a ship at a Brazilian port are about 40 days.
There is also an undercurrent of worker unrest, not uncommon at this time of year, but this year the reason is a little different. Instead of striking regarding better wages, workers are concerned about effort to privatize port operations. This privatization could lead to greater efficiency and fewer workers.
With the rain continuing in parts of Brazil (heavier rains have moved south out of Mato Grosso and into Parana and other areas), the early harvest of beans is still a little slow. Plus there are several quality concerns due to the wet conditions—the beans need to be dried and then the moldy, musty, sprouted, shriveled, etc. beans are sorted from those of better quality.
The market will continue to be very sensitive to news regarding export sales, the speed of loading in Brazilian ports, etc. There are not enough soybeans in the US—the world market needs Brazilian beans!
On a more mundane note, the USDA Chief Economist gave the main presentation at the annual Outlook Forum. Although there will be more detail released tomorrow, here are today’s highlights:
1. The USDA feels the acreage pie could be a little smaller than previously thought. Acreage for the 8 major crops will be down 2.2 million acres or almost 1 percent. There was not really a direct comment regarding why this was forecast.
2. Farmers will plant 96.5 million acres of corn, with production at 14.53 billion bushels. There will be 77 million acres of soybeans, with production of 3.405 billion bushels. These are both records being forecasted. The wheat crop is projected at 2.1 billion bushels, based on 56 million acres.
3. The USDA is forecasting corn use for ethanol of 4.675 billion bushels in the crop year 2013-2014. This was the only specific demand category discussed. This number does not produce the amount of ethanol required by the RFS. Excess RIN’s from previous years will need to be used to meet the RFS volume requirements. The USDA sites the Annual Energy Outlook from the Energy Department, which shows a slow 30 year decline in motor gasoline usage.