20140310-高盛-Running_out_of_US_soybeans_but_still_plenty_of_corn_13页_433kb

Summary of Document: Running out of US Soybeans but Still Plenty of Corn

Core Content

The document discusses the current and projected market dynamics for US soybeans and corn, focusing on price movements, export trends, and inventory levels. It highlights the impact of weather conditions, export demand, and market speculation on these commodities.

Main Points

Soybean Market

• Price Rally: Soybean prices have sharply increased due to strong US export demand, especially to China, and adverse weather in Brazil.
• Inventory Outlook: US soybean inventories are expected to reach critically low levels this summer, while corn inventories remain ample.
• Forecast Adjustments:
  • The 3-month soybean price forecast is raised to $14.00/bu, close to current prices.
  • The 12-month forecast is increased to $10.50/bu from $9.50/bu.
• Export and Crush Dynamics:
  • Strong US exports may lead to a slowdown in export activity from April to August.
  • Soybean crush margins are expected to decline sharply, which could reduce domestic demand.
• Trade Recommendations:
  • The short old-crop soybean trade recommendation is closed due to the risk of price volatility.
  • The potential loss is $13.6%.

Corn Market

• Price Rally: Corn prices have also risen due to strong export demand and lower South American production forecasts.
• Inventory Outlook:
  • US corn inventories are expected to increase further in 2014/15, reaching the highest level since 2005.
  • Corn inventories will grow faster than soybean inventories.
• Forecast Adjustments:
  • The 3-month corn price forecast is raised to $4.50/bu, still below current prices.
  • The 12-month forecast remains at $4.00/bu.
• Weather Risk:
  • Cold and wet spring conditions may delay corn planting.
  • Summer weather will influence corn prices significantly.
• Trade Recommendations:
  • The short Dec-14 CBOT corn trade recommendation is closed with a potential loss of $0.4%.

Key Information

• USDA Reports:
  • The March 31 USDA Grain Stocks report is a critical catalyst for assessing feed and residual use.
  • The Prospective Plantings report will focus on spring planting conditions.
• Weather Impact:
  • Cold winter in the US may extend into the spring, affecting planting progress.
  • Excessive rain in Mato Grosso and dry conditions in Brazil's east and south may reduce soybean production.
• Market Dynamics:
  • The soybean to corn price ratio is expected to remain high, with a fair value of 2.65 vs. the current forward curve of 2.45.
  • New-crop prices for soybeans and corn include a significant weather risk premium.
• Supply and Demand:
  • US soybean production and exports are expected to be higher than previously anticipated.
  • South American soybean production is still record high, but may not decline significantly in 2014/15.
  • Ethanol production and DDG supplies will help reduce soymeal demand.
  • Meal imports from Argentina may increase as the peso rate converges with the black market rate.

Forecast Summary

Commodity	3-Month Forecast	6-Month Forecast	12-Month Forecast
Soybean	$14.00/bu	$10.50/bu	$10.50/bu
Corn	$4.50/bu	$4.50/bu	$4.00/bu

Key Risks

• Soybean:
  • Potential export cancellations from China.
  • Volatility due to strong speculative long positions.
• Corn:
  • Weather-related delays in planting.
  • Potential disruptions in Ukraine affecting export forecasts.
• Weather Dependency:
  • Both markets are highly sensitive to weather conditions in the US, which can impact planting and yield outcomes.

Conclusion

The US soybean market is expected to face a significant inventory drawdown this summer, leading to price support, while the corn market remains well-supplied with ample inventories. Price forecasts for both commodities reflect the current market conditions and embedded weather risk premiums. Trade recommendations are being closed due to potential losses, and the outlook for 2014/15 suggests a more modest recovery in soybean inventories compared to corn.