WASHINGTON, Feb. 24, 2012- Chinese import demand for soybeans and corn is a “major uncertainty” for the upcoming year, said USDA Economic Research Services Ag Economist Ed Allen.
Allen told attendees of USDA’s 150th Ag Outlook Forum that China’s import demands, as well as South American soybean and corn production, are among the key developments to watch in 2012.
Argentine soybean exports are taking up an increasing size of the market. Consultant for United Soybean Board for South America Pablo Adreani told the Forum that Argentine soybean meal makes up 49 percent of the world market share and Argentine soybean oil makes up 54 percent. By comparison, Brazil’s soybean oil makes up 20 percent and U.S. soybean oil has six percent of world market share.
Adreani described his outlook for Argentine’s soybean production as reaching 70 million tons by 2020, crediting “technology, technology and more technology” as the driver for productivity. Future productivity may be more efficient, since South American nations Argentina, Brazil, Paraguay and Uruguay recently accepted an internal procedure to approve biotech traits. “We no longer have to wait for Europe,” Adreani commented.
Among the other developments to watch are the prices and weather ahead of U.S. spring planting, Allen noted. He also said, as USDA outlook reports indicate, that U.S. corn production is expected to be 15 percent higher than last year, offering doubled ending stocks and pushing cash prices down to $5 per bushel.
“What we are assuming about US yield is a huge rebound” for U.S. corn yields this year, he said. U.S. wheat, corn and soybean planted acres combined will be three percent higher than last year. The increase is mostly due to corn and wheat acreage, with corn hitting the highest record for planted acres since 1944.
Total corn use is expected to increase 765 million bushels, with higher exports offsetting the slight decline projected for corn use for ethanol in 2012/2013.
“The driver for demand in the last decade has been corn use for ethanol,” Allen said, but it is not expected to support growth in domestic usage in the upcoming year.
Federal incentives, including the Volumetric Ethanol Excise Tax Credit (VEETC) expired at the end of last year. The U.S. has high ethanol stocks, but ethanol producers currently have negative margins for production, Allen explained.
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