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Exports for U.S. soybeans will soften once South America’s crop hits the market

Soybean exports will soften as more of South America’s beans become available to the world market, and corn demand will remain strong offsetting the soft export market for corn, according to USDA’s latest World Agricultural Supply and Demand Estimates (WASDE), released March 8.
“In general, the report is a neutral report, relatively well-anticipated by the trade,” says Jim Bower, president of Bower Trading in Lafayette, Ind. Bower was the analyst on a post-report MGEX press conference call.
Looking at corn first, USDA left projected 2012-13 U.S. corn ending stocks unchanged at 632 million bushels. The department also lowered projected corn exports by 75 million bushels, a move that was widely anticipated, and raised both feed use and corn imports.
“Corn exports have been dismal for the past couple of months,” says Bower. The trade was anticipating that USDA would lower its forecast for corn ending stocks, which could be considered a small surprise in the numbers.
Competition from South American corn exporters has been stronger than expected, notes USDA in the report. Competitively priced feed wheat has also hurt U.S. corn exports, the department notes.
USDA’s forecast for feed and residual disappearance for corn was raised 100 million bushels due mostly to expansion in poultry production
USDA’s projected season-average farm price for corn was lowered 20 cents on the high end of the range to $6.75 to $7.45 per bushel.

Soybean exports to soften
Concern over tightness of old-crop U.S. soybean supplies was a major concern heading into the report, but USDA left ending stocks of old-crop soybeans unchanged at 125 million bushels, which is slightly higher than expected.
“USDA is somewhat hesitant to bring the estimate of the soybean carryout lower,” says Bower. “In Brazil, the line up at two ports of embarkation is eight to nine days. There is 9.9 million tons of cargo space waiting to be loaded.”
Eventually, he says, Brazil’s supply of soybeans will hit the world market, but until it does, China will continue to buy from the United States, and that will support prices.
“Although soybean export commitments through February exceeded last year’s pace, U.S. exports are expected to decline in the months ahead as increased competition from a record South American soybean crop limits additional U.S. sales during the second half of the marketing year,” says USDA in the report.
USDA narrowed its projected season-average price range for soybeans by 25 cents on both ends of the range to $13.80 to $14.80 per bushel.

World snapshot
USDA lowered its world ending stocks estimate for corn, from February’s 118 million metric tons to 117.5 million metric tons this month. World production was cut 310,000 metric tons on reductions in the size of both Argentina’s and Brazil’s corn crops.
USDA raised ending stocks of world soybeans slightly to 60.21 million metric tons, up from February’s 16.12 million.
“It takes the edge, at least temporarily, off the tightness in the soybeans,” says Bower.
USDA lowered its projected world production figure for soybeans to 268 million metric tons […]

High-Profit Vs. Low-Profit Beef Producers

The prices of fuel and equipment have risen significantly faster over time than the market value of cattle. Therefore, I prefer a production system highly dependent on soil, sunlight, rainfall, and our ingenuity and inventiveness, than one highly dependent on fossil fuels and equipment. Most of the following suggestions will tie back to this statement, as well as the fact that cattle prices tend to be cyclical and will most likely decline again at some time.
In my travels, I have visited with many ranchers who struggle to be profitable, even with the good prices of the last few years. At the same time, I talk with ranchers who are having the highest profit years of their lives. Nonetheless, this latter group of ranchers assumes that cattle prices will go down and that the price of purchased inputs will continue to rise, largely because of fuel and equipment prices. As a result, they are paying attention to several, or even all, of the following factors:
• Ranch size. There are significant economies of size in ranching. Unless there are sources of income besides cattle, small ranches struggle to be profitable and sustain a good standard of living. However, small ranches run by people with off-farm jobs can be very profitable if they keep it simple, and keep overhead low. In fact, they can compete very well with medium-sized ranches where the operators only work on the ranch.
• Cows per worker. Except for land-associated costs, many ranches have more costs that align with the number of workers than with the number of cows. I know of many ranches that run 800-1,200 cows, or cow and yearling equivalent, per worker. That keeps labor, housing, equipment and horse cost per cow quite low.
• Acres per cow. My experience says it’s usually much less expensive to increase carrying capacity by developing stock water, adding fence and managing grazing than by purchasing more land. As you add cows, you don’t have to add people or other overhead. In addition, grazing management can be a very enjoyable challenge.
• Fed feed vs. grazed feed. There are very few situations where grazing more and feeding less won’t be more profitable. This may mean you begin to graze former hay land. As I travel about giving talks to groups of cattlemen, I usually hear two kinds of responses. There are those who contend it’s impossible to reduce feeding, and those who tell me about the financial progress they’re making by grazing more and feeding less. I’ve personally been involved in, and have seen, thousands of acres of hay land turned to pasture. In a few cases, pastures that previously produced winter hay are now pastured in the summer, while the cattle are wintered on what once was summer range.
• Keep debt-to-equity ratio low. I’ve seen too many cases of a rancher wanting to develop water and buy some fencing to graze better, but his operation’s debt-to-equity ratio was too high to borrow money. Low debt gives you […]

Feb. 28, 2013 by Amanda Radke in BEEF Daily
Have you ever heard the phrase, “overfed but undernourished?” This aptly describes the two-thirds of Americans who are considered overweight or obese. As a society, we are eating plenty, but are we getting the nutrients we need to thrive? And, if not, how does this impact our daily performance, longevity and future generations?

Amidst a sea of Meatless Mondays campaigns and anti-beef sentiments, a new study in the United Kingdom (UK) highlights the crucial role of red meat in the diet.

The study, which is entitled, “The Seven Ages Of Man – Is There A Role For Meat In The Diet?” is set to be published in the British Nutrition Foundation’s Nutrition Bulletin.
Here’s an excerpt from a report on the study:

“Millions of people are putting their health at risk because of inadequate intakes of vital vitamins and minerals, a new study has revealed. But the research also highlights just how important the role of red meat is in the diet in helping to cover this nutrition gap. Meat has been a staple part of the human diet since the dawn of mankind, but in recent years there has been some debate over whether too much red meat can raise the risk of health problems. Now a team of researchers has studied the issue of meat in the diet to help gauge just how important it is for a healthy mind and body – as well as the crucial nutrients that red meat in the diet brings.

“The latest study found that data from dietary surveys indicates that diets for people of all ages can be worryingly low in nutrients normally found in meat, such as vitamin A, vitamin D, iron, magnesium, zinc, selenium and potassium. The researchers say that integrating red meat into diets across the age spectrum, from infanthood to old age, may help to narrow the present gap between vitamin and mineral intakes and recommended levels. In addition, there is emerging evidence that nutrients commonly found in red meat may play a role in supporting cognitive function, immune health and addressing iron deficiency.”

So, what is red meat’s role in the diet? Here is what the study finds:

“Red meat – defined as beef, veal, pork and lamb, which is fresh, minced or frozen – is a source of high-quality protein and important micronutrients. Beef and lamb are classed as a ‘rich source’ – more than 30% of the recommended daily allowance (RDA) – of vitamin B3 (niacin), B12 (cyanocobalamin) and zinc. It is also a ‘source’ – 15% or more of the RDA – of iron, potassium and phosphorous. Pork is also a ‘rich source’ of vitamin B1 (thiamin). Meat, particularly from grass-fed animals, can be a valuable source of long chain (LC) n-3 polyunsaturated fatty acids (PUFA) such as omega 3 fatty acids. Research shows that these fatty acids support normal fetal development as well as help lower the risk of inflammatory conditions, depression and dementia in later life. Red meat is […]

JANUARY 23, 2013

By Darrel Good, University of Illinois
Courtesy of farmdocdaily
The drought-reduced U.S. corn crop of 2012 suggested that corn prices might behave in a pattern generally described as “short crops have long tails.” The phrase depicts the expectation of rapidly rising prices that peak near harvest time, decline in an unspecified pattern over the next several months, and return to pre-drought levels as early as the following marketing year. The decline in prices is expected as a result of a slowdown in consumption and a return to normal production.
Corn prices this year have generally followed the expected short-crop pattern as the expected consumption and supply responses continue to unfold. The pace of consumption of U.S. corn so far in the 2012-13 marketing year has been slower than that of last year. However, the slowdown has been modest and has come primarily in the export market and in the production of ethanol rather than in the domestic feed market as earlier expected. The rapid pace of domestic feed and residual use of corn revealed on Jan. 11 breathed some life back into old crop corn prices even though the pace of exports and domestic processing remain low. In addition to a slowdown in consumption of U.S. corn, the USDA projects another large corn harvest in Brazil in 2013 and a rebound in production in Argentina following the drought reduced harvest of 2012. While likely large, the size of those crops is yet to be determined and recent dryness in some areas has raised some yield concerns.
Some of the elements that contribute to the price decline following a short crop are clearly occurring. The final element, and likely the most important element, of the expected price decline is the size of the 2013 corn crop. The question is whether production will fully rebound from the extremely low level of 2012 as it has following other droughts over the past 50 years. Production prospects begin with expectations for planted acreage. Planted acreage totaled 97.15 million acres in 2012, 5.219 million more than planted in 2011 and 3.628 million more than the recent peak in 2007. For the most part, analysts are reporting expectations of even larger acreage in 2013. Those expectations appear to be near 99 million acres. The increase would come from an overall increase in row crop acreage as some land has come out of the Conservation Reserve Program and from reductions in the acreage of less competitive crops.
Planted acreage of 99 million would point to acreage harvested for grain near 91.5 million acres under non-drought conditions. That would be an increase of just over four million acres from acreage harvested in 2012 when more than the usual amount of acreage was harvested for silage and abandoned. Such acreage would point to prospects for an extremely large crop in 2013. Early season acreage expectations, however, are often not a good forecast of actual acreage. Last year, for example, The USDA’s March Prospective Plantings report indicated intentions to plant 95.864 million acres […]

JANUARY 19, 2013
By: Nate Birt, Farm Journal Social Media and News Editor

Corn and wheat enjoyed favorable market conditions this week as they continued riding on the Jan. 11 USDA reports, says Jerry Gulke, president of the Gulke Group.
“What we can say is the report was bullish, and it extended,” Gulke says. “In other words, not just for a week, but now we’re extending the second week. And going into a three-day weekend, you would think this thing would set back more than it did. Sometimes you lose half of what you gained … . I think the market’s still concerned, in the grains at least, how are we going to curb demand and can we do it enough?”
Meanwhile, new numbers from Informa Economics show an increase in planted acres for corn.
“I think we have to remember that Informa does this stuff using some economic model,” Gulke says. “They compare cost or return on investment or what’s the growth in beans versus corn, and the net profit, and as those fluctuate they have a tendency to change their acres. The USDA does the same thing.”
The decision by Cargill to close a cattle processing plant in Texas had repercussions this week, as well.
“The cattle market and feeder cattle market does not look good,” Gulke says. “It is a bad situation that says that if you buy feeder cattle here and you’re going to pay more for corn, you’re not going to make any money. And I think this week we lost about $40 worth of potential profit in live cattle … . So if it was bad, it got worse this week, and that’s what we’re trying to digest.”