Fundamentally Speaking

New Crop Soybean Sales

Citing a reduced crop resulting in higher expected prices along with increased competition from South America, the USDA cut its projected U.S. 2013-14 soybean export projection by 65 million bushels to 1.385 billion in the August world agricultural supply-demand report (WASDE).

Is this justified in light of the fact that our new crop soybean sales for the marketing year beginning September 1 as of the beginning of August totals 588.4 million bushels, the highest total for the first week of August, the month prior to the start of the new marketing season?

The accompanying graphic shows new crop soybean sales as of the first week of August and those sales as a percentage of the August WASDE new crop soybean export projection.

Also plotted is the change in soybean sales from that August WASDE number to the actual final figure with the 2012 year using the August WASDE figure which was given as 1.315 billion bushels, a figure that was pared by 15 million bushels from the July 2013 WASDE report.

These new crop sales represent 42.5% of the new 2013-14 export projection of 1.385 billion bushels.

This is the second highest percentage on the books as of the beginning of trailing only the year ago figure of 50.7%.

If a large percent of new crop projected exports are already on the books does that suggest a high likelihood that final exports will be higher than what is projected in the August WASDE, more than a full year before the new crop season ends?

For this marketing year the August 2012 WASDE pegged exports at 1.110 billion bushels and now they are projected 205 million.

Statistical analysis indicates there is a weak positive relation between new crop sales on the books and changes from that point until the final number.

Much depends on what direction prices are going and expectations on forthcoming South American production.



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