Low oilseed prices don't make sense

[dmlfarmer]

A newsletter from University of Illinois department of agriculture and consumer economics is titled:

A Slower Pace of Soybean Consumption Is Needed

Two excerpts of the article by economist Darrel Good state:

"The pace of domestic soybean consumption accelerated in December 2013 and the pace of export commitments continues to exceed expectations. Even with the normal seasonal slowdown in exports of soybeans, soybean meal, and soybean oil consumption seems to be on track to exceed the available supply"...

..."If exports for the current marketing year reach 1.549 billion bushels, year ending stocks would total only 96 million bushels, or 2.8 percent of projected consumption. Stocks cannot realistically be reduced to such a low level, with 125 million bushels being a likely minimum level of ending stocks. Exporters appear to be selling soybeans that will not be available....

If these stats are true, the world oilseed market is being manipulated by someone and farmers (including Canadian farmers) are losing a huge amount of money from artificially low oilseed prices.

Full article can be read at:
http://farmdocdaily.illinois.edu/2014/01/slower-pace-of-soybean-consumption-needed.html

[charliep]

You always have to put a time frame on the question. US carryovers will be tight by the end of the crop because China buys in the fall and early winter. Happened this no different than other years. China will switch to South America over the next 2 to 3 months but US supplies have already been delivered. Your next issue will be US soybean acres with the price relationship with corn and decisions about what to plant. US soybean and soymeal are reflecting this as indicated by the inverse. Soyoil - not so.

[dmlfarmer]

Charlie: not sure if you read whole article but not all sales to China have been filled yet:
(quote) "The magnitude of unshipped sales is also much larger than that of last year. As of January 16, the USDA reported that those outstanding sales stood at 514 million bushels, compared to 307 million bushels at the same time last year...The market continues to expect cancellations by China, but none have been confirmed."

Yes, higher acres this year could certainly drop new crop prices but it does not seem current world oilseed prices reflect the current old crop supply, especially given the high US dollar.

Does no one else wonder what the hell is going on with old crop oilseed prices when US economists are warning that unless consumption and sales are lowered there will be a soybean shortage in the US this summer?

[charliep]

It is a strange world. I note in the previous couple of years that the US has brought in soybeans into crushers along the east coast to fill the void left by a big program in the first six months.

We will have to follow the pace of US soybean disappearance carefully. To make more relevant to me, whould I buy beans today as a speculative position. I wouldn't in that your main driver in terms of China will start playing the US off against South American supplies. A major challenge in the past is Brazilian and Argentine logistics/political uncertainty and ability to get product to port. More risk/uncertainty (risk being both good and bad outcomes).

[charliep]

that should be south american soybeans into US crush plants.