Post on 30-May-2015
description
transcript
What’s Ahead for Soybean Markets
Gary SchnitkeyUniversity of Illinois
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World Soybean Production
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Mill
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Marketing Year
ROW
US
South America
World Consumption
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Mill
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Met
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Ton
Marketing Year
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US
South America
World Ending Stocks
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US Production
Year Yield Acres Production
Bu/acre Thousand Million bu.
2008 39.7 74,681 2,967
2009 44.0 76,373 3,359
2010 43.5 76,616 3,329
2011 41.5 73,636 3,056
2012 40.5 75,315 3,050
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2012 Projected in July, WASDE report
Current unknown is yield
U.S. Yield
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2012 Trend Yield = 43.7 bushels
Worst Yielding Years Since 1972
U.S. Soybean ProductionYear Actual Trend Difference
1988 27.0 33.1 -6.1
2003 33.9 39.7 -5.8
1983 26.2 30.9 -4.7
1974 23.7 26.9 -3.2
1984 28.1 31.3 -3.2
2011 41.5 43.3 -1.8
2012 P 40.5 43.7 -3.2
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Precipitation at Urbana, IL (inches)
Year June July August
2012 2.2
2011 4.2 1.5 1.7
1988 .3 3.6 1.3
Avg 4.1 3.9 3.6
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Lowest Rainfall Years Since 1910, Urbana, IL
July RainfallYear Inches
1916 .5
1930 .5
1914 .6
1933 .6
1911 .6
1924 .8
1940 .9
August RainfallYear Inches
1953 .7
2008 .8
1937 .8
1961 1.3
1988 1.3
1960 1.3
1986 1.4
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Percent of Normal Rainfall, Last 30 Days, AHPIS
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Percent of Normal Rainfall, Last 60 Days, AHPIS
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November 2012 Futures Contract
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Marketing 2012 Crop
• Short crops have long tails with early peak, 5 of 8 years before November of year of harvest
• Darrel Good on Farmdocdaily (www.farmdocdaily.illinois.edu)
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For RP holders, Consider Hedging Production
• Nov 2012 contract on 7/25/2012 was at $16.00 per bushel
• Many hold RP policies at 75% and higher coverage levels– Uses higher of projected or harvest price– When harvest price is above projected
prices, RP makes payments on yield below yield guarantee (TA-APH yield times coverage level)
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RP and Hedging
• TA-APH yield = 45 bushels• Coverage level = 80%
• Make payments when yield below 36 bushels (45 bushels x .8)
• Shortfall at harvest price, when harvest price is above projected price ($12.55)
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• Current prices are not good price
• Can hedge up to production guarantee
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Pre-harvest Hedging
• Good strategy to spread sales, including pre-harvest
• Hedging losses are occurring on spring hedges
• Be consistent
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Projected Production
Year USSouth
America ROW Total
2008/09 80.75 93.80 37.82 211.95
2009/10 91.42 130.88 38.76 261.08
2010/11 90.61 132.87 41.22 264.69
2011/12 83.17 110.50 43.20 235.88
2012/13P 83.01 140.80 43.35 267.16
Following shows projections with 37.5 U.S. yield
2012/13P 77.00 140.80 43.35 261.15
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South American Production(million metric ton)
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Marketing Year
Soybean Consumption(Million Metric Ton)
MarketingYear U.S.
SouthAmerica ROW Total
2007/08 51.63 72.78 178.11 229.74
2008/09 48.11 69.42 173.23 221.34
2009/10 50.67 74.17 187.34 238.01
2010/11 48.39 79.75 202.91 251.31
2011/12 48.35 79.08 205.08 253.42
2012/13P 47.21 84.08 215.93 263.15
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Soybean Meal Consumption, China, EU
2007 2008 2009 2010 2011 2012P0
10,000
20,000
30,000
40,000
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60,000
China (1,000 Metric Ton)
2007 2008 2009 2010 2011 2012p0
10,000
20,000
30,000
40,000
50,000
60,000
EU-27 (1,000 Metric Ton)
Ending Stocks
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Soybean Prices
• Fall Delivery is $16 to $16.25
• WASDE for 2012/13 marketing year is at $13 to $15
• November 2013 contract at $12.71
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Summary
• Short consumption while continuing projected strong demand
• Lead to strong prices
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