Latest Supply/Demand Estimate Reduces South American Soy Crop

USDA’s latest World Ag Supply and Demand Estimates shows reduced South American soybean competition and a record U.S. corn price forecast. USDA is still estimating 2011-2012 season average corn prices at a record six-dollars-20-cents a bushel. World Ag Outlook Board Chair Gerald Bange:

 “It’s up a little more than a dollar from the five-dollars-18-cents record that was recorded in 2010-2011. If you look at the crop right now and how much of the crop has been marketed, we think about 60-61% of the crop has been marketed at six-dollars, and that implies about six-dollars-55-cents for the rest of the year.”

USDA raised its estimate of Brazil corn production by one-million tons – but made no change for Argentina. Soybeans was a different story:

“For Argentina, Brazil and Paraguay combined, we actually went down about 6.4 million tons. In terms of bushels, that is roughly 235 million bushels, a very sharp decrease in terms of just one month.”  

But not enough to change the U.S. soybean export forecast – which Bange says would have dropped – if not for the decline in South American production. As for soybean prices: 

“We are looking at a soybean price now of twelve-dollars, that is up thirty cents from our previous forecast”, largely over concerns over South America. 

Meantime – USDA’s held its 2012 forecast of corn use for ethanol steady at around 5-billion bushels – 35 to 40-percent of the crop. But Bange admits lots of factors could impact ethanol demand – including the loss of the blender’s credit:

“The profitability of producing ethanol is simply not there. However, given the fact that the oil price has gone up to over one hundred-dollars per barrel now, there is certainly room in there to make money blending it. The problem is the so-called blending wall.” 

The blending wall limits ethanol’s marketability at a time when the credit’s gone – but fuel prices are up and export demand’s been strong. But Bange cautions – if gas prices get too high – that could add another wrinkle – stunting demand of gas – and therefore ethanol. is dedicated to serving the agricultural industry in the Carolinas and Virginia with the latest ag news, exclusive regional weather station readings, and key crop market information. The website is a companion of the Southern Farm Network, provider of daily agricultural radio programming to the Carolinas since 1974. presents radio programs, interviews and news relevant to crop and livestock production and research throughout the mid-Atlantic agricultural community.