The U.S. is going into the 2013/14 marketing year with historically tight supplies of soybeans and a “really, really tight” stocks-to-use ratio, says John Anderson, senior economist for the American Farm Bureau Federation in Washington.

But, he said just before the USDA’s June 28 report was released, “We tolerate tighter soybean stocks than we do corn stocks, because we know that halfway through the marketing year South America is going to come in with big production.

“We can run tighter on soybeans because there’s another big supplier out there. Other users in the world don’t get as concerned about our stocks being low because they know South America’s crop is coming on and the flow of production is smoother through the year,” he said at the Mississippi Farm Bureau Federation’s joint soybean, corn, wheat, and feed grains advisory committee meeting at Grenada, Miss.

The June 28 USDA report (see story here: forecast soybean planted acres for 2013 at a record high 77.7 million acres, and acres for harvest at 76.9 million, also a record, if realized. The March forecast had pegged intentions for soybeans at 77.1 million acres.

Even with the lower 77.1 million figure that the USDA forecast in March and a 44.5 bushel average yield, Anderson says, “The bottom line is that we expect to come to the end of this marketing year with a substantial increase — basically a doubling — of soybean carryover and an 8.4 percent stocks-to-use ratio, which would be a pretty big number.

“There’s probably not as much mystery about use figures; it’s easier to get a handle on soybean use numbers than for corn, because trying to account for feed stocks/use is such a challenge.

“We don’t see the kind of dramatic changes in soybean use numbers that we do for corn. The soybean numbers are less debatable to me than the corn numbers. Bottom line: I think we could actually see the soybean use numbers increase more that forecast, but still end up with a stocks-to-use ratio that would be a big jump from where we are now.”

Soybean stocks are “tight right now,” Anderson says, but “it’s important, I think, to look at who’s holding stocks. For world stocks held by major exporters, we’ve come up quite a bit already from some of the low levels we had back in the mid-2000s. If we get the kind of crop USDA is talking about, exporter ending stocks will be very large, which represents a fairly quick fundamental change in this market.”

How much of a factor will prevented plantings of corn factor into the market?

“My 2 cents worth,” he says, “is that I don’t think prevented plantings will be as big a deal as a lot of people have been making it out to be. The bias for most growers is to go ahead plant the primary crop, even though it’s late. I think the availability of prevented planting payments will have a small effect on total acres. I could be wrong, and I’m guessing like everyone else.

“There’s a lot of talk about taking the payments, but I think the effect will be minimal. Even if you plant at the end of the late planting period, the lowest you’ll get is 60 percent of your initial guarantee. You’ve got that level of insurance sitting out there as a guarantee, even should you decide to plant after the late planting period. My feeling is that most people will go ahead and plant.

Déjà vuall over again

“The northern states could still end up with a really good yield, but there’s always the possibility of an early frost that increases the probability of late season losses. They’ve got a shorter window to work with, and the odds of something adverse happening in the latter part of the year are higher.”

So, Anderson says, “It’s pretty much déjà vu all over again. We’re in exactly the same situation we were in a year ago at this time. Everything is riding on this year’s weather — that’s going to tell the tale. At some point, we will get a normal corn yield — it didn’t happen last year, it may or may not happen this year, but it will happen. And when it does, supply fundamentals will turn quickly in the grain markets.”

Wheat stocks “are fairly comfortable now,” Anderson says. “I think we’ll see them come down some this year, but not to the level that people will get really concerned.

“One thing that’s interesting in the wheat market, if look at the crop condition, between freezes and dry weather it has been a terrible year in the Plains, and the condition of winter wheat is pretty lousy.

“Going back to the late 1980s, this year’s crop is in the bottom five in terms of condition. I was a little surprised, looking at the USDA numbers, at how small the effect on national average yield turned out to be as result of this condition situation. We’ve got about 40 percent of the crop rated poor to very poor.

“If we look at similar really bad years, the national average total wheat yield ended up only about 7 percent below trend. I don’t know the complete explanation. Wheat’s a very resilient crop, and there is some incentive for spring wheat growers to be more aggressive to smooth out the numbers.

“World wheat stocks are down a bit below the 20-year average, but not by a lot. I think the market is fairly comfortable with where we are.”

Looking at wheat and rice stocks together, Anderson says, “The fundamentals affect one another. Rice stocks, in total, look modestly below the 20-year average. If we look at what’s held by major exporters that’s going to be on the market, the total has got a lot bigger in last five or six years. I think the world’s pretty comfortable with the level of rice stocks, and that was even before we’d planted this year’s crop.”