World Grain - January 2013 - 30

FEATURE: GRAIN AND OILSEED MARKETS

1,200

800

400

-1

-400

-2

million tonnes

-800
12-13

11-12

10-11

09-10

08-09

YOY change soybean imports

CBOT Soybean price change (US¢-bushel)

Figure 2.5: China’s soybean imports continue to increase despite
CBOT Soybean price increase of $4 per bushel

YOY price change (RHS)

Source: Bloomberg, Rabobank, 2012

2012-13. Rabobank projects that a record 97.6 million acres will be planted
in the U.S., further displacing soybeans
as CBOT corn prices are forecast to outperform CBOT soybeans ahead of U.S.
planting decisions in Q1 2013.
U.S. stocks-to-use scenarios for 201314 support a wide range between Rabobank’s high-end CBOT corn price forecast of $7.50 per bushel and its low-end
scenario of $4.50 per bushel for Q4 2013.
“Our base-case scenario shows stocksto-use rising 13.6%, although we acknowledge signiﬁcant risks to our returnto-trend yield forecast,” Rabobank said.
Record corn production in South America in 2012-13 is expected to contribute
to price weakness. Rabobank forecasts
corn production in Brazil and Argentina
to reach 97.3 million tonnes, although
high yield volatility magniﬁes production
risk relative to the U.S. Focus on South
American production during the ﬁrst
quarter of 2013 should help deferred corn
futures shift lower than implied futures,
with market focus shifting to the U.S. in
the ﬁrst quarter of 2013, the report said.
Rabobank said it expects China corn
import demand to reach 5 million tonnes
30

in 2013-14, about 3 million tonnes above
USDA estimates for 2012-13 and a supportive factor for prices. It said CBOT
corn price declines in mid-2013, due to
U.S. and South American harvests, are
expected to be tempered by “buy and
dip” procurement from China, with domestic production unable to meet growing demand.
“Ongoing industrialization of the animal protein industry is expected to support feed demand growth in China,” Rabobank said. “Despite slowing economic
growth, we believe Chinese expansion is
robust enough to support increases of
7% year on year in 2012-13. This would
increase total Chinese feed demand to
141 million tonnes in 2012-13.”
Rabobank said corn stocks in the U.S.
are likely to be minimal by the end of
August 2013 as it believes the USDA
continues to overstate U.S. production,
with feed demand running at an unsustainable pace. Demand for U.S. corn has
slowed, particularly from the ethanol
sector and for export, but the pace of
feed use is too high in view of current
supply constraints, the report said.
“Total 2012-13 U.S. corn production

was 1 billion bushels below the previous
year’s total use, highlighting the need
for immediate demand rationing, with
only 988 million bushels of stocks entering 2012-13,” Rabobank said. “Our
calculations suggest that U.S. domestic
consumption, absent signiﬁcant imports,
must decline 11% year on year in 201213 — well above current indicators of
5% to 6% reduction year on year.”
Rabobank said it expects global corn
stocks-to-use to improve 3.5% year on
year to 15.9% in 2013-14, which is still
substantially below the 10-year average of 17.2%. Strengthening global
consumption of corn — up 59 million tonnes year on year to 911 million
tonnes in 2013-14 — is forecast to prevent stocks-to-use levels from recovering to long-run average levels.
SOYBEANS
Like corn and wheat, soybeans are expected to open the year with high prices
due to tight supplies but they will decline
as production rebounds later in the year,
with prices for the year averaging below
2012 levels, according to Rabobank.
“In our view, the current global supply shortage of soybeans, as a result of
drought in both North and South America last season, has not been fully accounted for in prices,” Rabobank said.
“Although we expect record-large South
American production will come online
in second-quarter 2012-13 and result in
lower prices in 2013, we believe prices
will rebound from current levels until
this crop is available in March.”
Global stocks to use are expected to
persist below 23% for the second consecutive year, Rabobank said, noting that
it will likely take multiple seasons to replenish global soybean supplies to adequate levels as weather and capacity constraints continue to hinder production.
“We forecast global stocks-to-use for
soybeans at 22.1% in 2012-13, 0.9%
below USDA’s November forecast,”
Rabobank said. “This is despite our
forecast for an increase in world production of 29 million tonnes (largely
on South America’s crop) reaching 266
January 2013 / World Grain / www.World-Grain.com

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World Grain - January 2013

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