Extension Communications
Extension 4-H Youth Building
Ames, Iowa 50011-3630
(515) 294-9915
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Extension Communications |
2/11/04
Contacts:
Robert Wisner, Ag Economics, (515) 294-6310, wisner@iastate.edu
Jean McGuire, Continuing Education and Communication Services, (515) 294-7033,
jmcguire@iastate.edu
South American Supplies Impact World Soybean Market
With prospects this summer for the tightest U.S. soybean supplies in nearly 40 years, South American soybean crop prospects have more than their usual importance to Iowa cash grain and livestock producers. Conditions through early February continued to point to record South American production but perhaps producing a slightly smaller crop than projected earlier, according to Robert Wisner, Iowa State University Extension economist.
"USDA projections in mid-January indicated the combined production in South America's five soybean-growing countries this spring would be about 3.8 billion bushels, 58 percent larger than the 2003 U.S. crop," he said. He added that these countries use much less of their soybean crop domestically than the U.S. Recent projections indicate combined exports of soybeans and products from South America's 2004 harvest will be about three times as large as those of the U.S.
South America's main harvest will be in March and April, although a small amount has been harvested already because of the long growing season in Brazil. Old-crop supplies from that region are seasonally light during the winter, but its exports will increase sharply starting in late April or May as its new crop moves into world markets.
"Private forecasts from South America indicate the crop may be slightly below January USDA projections. The potential lower production is due to dry weather in parts of Argentina's soybean belt and a small amount of Asian rust damage so far in Brazil. Even so, the crop is expected to set a new record, well above last year's U.S. crop," said Wisner.
Wisner said potential soybean and protein meal market impacts this spring and summer from South American soybeans are being clouded by uncertainty about Brazilian logistics. It is uncertain whether Brazil will be able to move soybeans into world markets fast enough to meet foreign buyers needs. Brazil has made improvements in its marketing system to accommodate the sharp upward trend in production. According to Wisner, there is widespread belief in the U.S. grain trade that its shipping capacity will be inadequate to offset the sharply reduced U.S. supplies.
The logistics of exporting Brazilian soybeans will be complicated by efforts of its largest port to initiate GMO and non-GMO soybean segregation," Wisner said. Brazil's government, for this year only, has allowed farmers to plant existing supplies of non-GMO soybean seed. However, three of its top-producing states have elected to remain non-GMO to supply export markets that prefer such soybeans. Other ports in the country have provided non-GMO soybean segregation in the past.
With very tight U.S. soybean and soy product supplies in prospect this summer, Wisner said pressure to import South American soybean meal into the U.S. is almost certain. He added that there is less certainty about soybean import prospects because no company wants to be the one bringing Asian rust into the U.S.
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