AgTraderTalk. Soybean Overview

Transcription

1 Soybean Overview 1. United States Cash Market and Grain Flow 2. South American Logistics and Costs 3. Relationship between CBOT Futures and Basis 4. Soybean Supply and Demand Situation and Market Outlook

2 1.United States Cash Market and Grain Flow US Trends Slow trains and rail congestion because of oil production More grain being shipped by barge and container Soybean shipments becoming more seasonal More exports through Gulf

3 Soybean Basis Basis in North and West is weaker Higher transportation costs to export market Issues with rail delays and rail car availability Higher basis on Mississippi River Gulf basis nearly $1/bushel on export demand

4 Soybean CIF Basis Gulf (New Orleans) Gulf basis made new record in August Gulf prices rallied so that Brazil imports would be profitable

5 Shipping Cost to Gulf US barge rates normally quoted as percentage of tariff Original tariff from St Louis to Gulf was $3.99/ton Current quote is 337.5% of tariff = $13.47/ton

6 Delivery Locations for CME Contracts

7 Delivery Locations for CME Soybeans Delivery locations for corn and soybeans are on Illinois River Illinois Rivers connects with Mississippi River and to the Gulf

8 US Soybean Exports This year had new record of 3.3 million tons of soybeans shipped in 1 week (November 14, 2014) 8 weeks over 2 million tons shipped

9 US Soybean Exports by Port

10 US Soybean Exports by Port New weekly record for weekly shipments off Mississippi River Interior shipments (containers and trains) remain strong Columbia River (PNW) not exporting more than previous years

11 Grain Barges Unloaded in Gulf

12 Slow Rail Speeds Time trains spend in terminals or hubs has increased substantially compared to last year For some locations and railroad companies time has doubled Norfolk South waiting 60 hours in Columbus, Ohio

13 Slow Rail Speeds Train speed has decreased as more oil is being shipped Grain train average speed was about 25.5 miles per hour last year (39.6 kilometers per hour) Currently some are below 22 miles per hour (35.4 kilometers per hour) Many grain companies complaining trains and rail cars are several weeks or months behind schedule

14 Container Exports to China

15 US Soybean Export to China Container and Vessel

16 2. South American Logistics Exports increasing Improved shipping logistics Interior transportation costs remain high

17 Trucking cost USD/ton from Mato Grosso 2013 trucking cost from Mato Grosso to Santos was $103/ton Trying to improve BR-163 road and ship more soybeans through port in the North Most soybeans still going South to Santos/Paranagua/Sao Francisco and trucking costs are high

18 Brazil Soybean Exports by Port

19 Brazil Soybean Exports by Port Brazil exports have doubled in the past decade Currently estimated to export 46 million tons Smaller ports are exporting a greater share of the total Smaller percentage of soybeans are leaving through Paranagua

20 Brazil Soybean Exports by Port (% of Total) Santos 28.9% 30.4% 27.9% Rio Grande 18.9% 16.3% 17.7% Paranagua 29.1% 16.9% 16.5% Sao Francisco do Sul 4.3% 7.4% 10.8% Vitoria 8.4% 9.8% 6.9% Sao Luis 4.5% 6.1% 6.8% Salvador 0.0% 3.9% 4.4% Manaus 4.0% 5.3% 3.1% Barcarena 0.0% 0.0% 2.4% Santarem 1.5% 3.3% 1.9% Imbituba 0.0% 0.0% 1.0% Ilheus 0.2% 0.5% 0.4%

21 Waiting Time - Paranagua In 2013 Paranagua had delays of over 70 days to load vessels 2014 delays were still large, but lower than 2013 Paranagua switched to only exporting soybeans (no corn) during the busy season and improved truck queues

22 Waiting Time - Santos Santos delays were still large, but decreased from 2013

23 Argentine Soybean Vessel Lineup China is the main buyer Argentine soybeans Argentine farmers continue to hold soybeans Argentine government trying to have farmers sell soybeans Taxes favor exports of soybean mea

24 Argentine Soybeans to China by Port Most Chinese soybeans loaded in Bahia Blanca and Necochea in Southern Argentina

25 3. Relationship between CBOT and Basis

26 Current Brazil Prices Prices in Mato Grosso are usually at a large discount to Southern prices because of transportation costs

27 Soybean Prices (USD/bushel) Over longer time period CBOT futures correlate with Brazilian interior prices and FOB prices in Paranagua

28 Brazil Basis (USD/Bushel) In recent years prices have differed by large amount Seasonal changes in basis have become bigger

29 Brazil Basis (USD/Bushel)

30 Brazil Interior Relationship to Futures Long term relationship between Brazil interior prices and CBOT Some years have higher correlations Recent years have had worse relationships between prices

31 Brazil Interior Relationship to Futures Past 3 years relationship between CBOT and Brazil prices is weaker 2013 saw large divergence when CBOT futures rallied on low US stocks

32 Paranagua Relationship to Futures Export prices have followed more closely to CBOT compared to Brazil interior prices 2013 also had wide changes in correlation

33 Brazil Exports to the United States US imported million tons of soybeans from Brazil in 2014 June imports from Brazil were 495,238 tons United States was the 5 th largest destination for Brazilian soybeans in 2014 Brazil Exports (million tons)(january-november 2014) China Spain 2.12 Netherland 2.00 Thailand 1.24 United States 1.06

34 4. Supply and Demand

35 Slow Sales in Brazil Farmer sales were slow because of low prices

36 Brazil Currency Weakness Brazil currency weak Drop in oil prices contributing to currency weakness

37 Mato Grosso Soybeans in BRL and USD In US dollar terms soybean prices in Mato Grosso have been steady In Brazilian Real terms prices have increased making farmers more willing to sell

38 Soybean Planting Pace Brazil soybean planting was slow Planting is now near historical pace

39 South American Production

40 Argentine Currency Farmers have incentive to store grain with high inflation and unofficial exchange rate lower Farmers sell at official rate which is stronger than market rate. Concern that after they sell soybeans for pesos that government will devalue

41 Argentine FX Reserves Argentine foreign currency reserves have been decreasing since 2011 Argentine governments wants farmers to sell to bring in foreign currency and tax revenue Banks not lending to farmers storing soybeans

42 Soybean Crushing

43 Soybean Exports Brazil and United States competing to be largest exporter Uruguay and Paraguay have increased Argentina exports are low because government wants soybeans crushed in Argentina before export

44 Soybean Ending Stocks Argentine farmers holding soybeans but may sell more Brazil has large stocks US returning to normal stocks level after very low stocks last year

45 Soybean Imports A perspective on Chinese imports EU growth limited

46 Key Points US exports of soybeans and soybean meal is high US ending stocks at highest levels in years, should reduce difference between CBOT futures and global prices Currency weakness in exporting countries should increase farmer sales Brazil logistics are poor relative to the US, however ports logistics have improved Argentina should see increased selling of soybeans by farmers

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