by Agrimoney.com
Farm officials cautioned over expectations of a large switch in US corn area to soybeans even as Morgan Stanley offered supportive comments too for prices, flagging the need to preserve "critically tight" supplies.
The somewhat bullish comments contrast with bearish outlooks from many other observers, including Goldman Sachs and Societe Generale, which last week cut forecasts for soybean prices, besides Deutsche Bank.
The US Department of Agriculture acknowledged the tendency of farmers in wet springs to reallocate area they have been unable to sow with corn to soybeans, which can be later seeded.
"Farmers who were unable to finish planting corn by early June will consider switching to soybeans, which has been a common pattern in other years with similarly wet conditions," the USDA said in follow-on comments from last week's Wasde report on world crop supply and demand.
Indeed, many analysts had expected the USDA, in the Wasde, to lift its estimate for soybean sowings, given the extent of corn planting delays, with the market on average foreseeing a 688,000-acre upgrade to 77.8m acres, according to a Reuters poll.
Linn Group forecast a 79m-acre figure with rival broker Allendale, while saying it was too early yet for a USDA upgrade, believing that the figure will end up at 78.9m acres.
'Drying must develop soon'
However, the USDA highlighted the difficulty that growers are having in sowing soybeans too, saying that "some drying must develop soon for any expansion of soybean planting from farmers' intentions in March", pointing out that crop insurance deadlines have passed for many areas, and imminent in the rest.
"Crop insurance policies sold in the Midwest have final planting dates that generally extend through the second or third weeks of June.
"Benefit levels for crops planted beyond those dates are reduced daily."
In fact, planting conditions appear improved this week, with Mike Mawdsley at broker Market 1, based in Iowa where sowings have suffered particular rain delays, noting that "the outlook is for warmer and drier weather this week. We need it".
'Slowed to a crawl'
If the USDA comments implied support for new crop soybean prices, Morgan Stanley gave vocal backing for old crop futures, despite the apparent headwind to values from an uptick in South American shipments.
Indeed, the USDA, which in its Wasde trimmed the forecast for US exports in 2012-13 by 20m bushels to 1.33bn bushels, said that shipments "have slowed to a crawl, currently averaging 3m-5m bushels a week.
"For most import markets for soybeans, US prices will not be competitive with South American shipments until next fall's new crop harvest."
'Prices may still need to move higher'
Morgan Stanley acknowledged that "Brazil has finally hit its stride" in soybean export, shipping a record 7.9m tonnes in May, a gain of 9% year on year, as the impact of logistical bottlenecks waned.
"This influx of new supply is starting to have an impact on US exports," which, at 21m bushels last month, fell 80% year on year.
However, the bank said that it did "not view the US export weakness as overtly bearish.
"Rather, it is necessary to preserve critically-tight US stocks.
"With cumulative US export sales already topping the USDA's full-year export forecast of 1.33bn bushels, we expect near-dated soybean prices may still need to move higher to discourage the shipment of the full US export commitment."
Morgan Stanley maintained soybeans as the bank's most bullish bet, foreseeing prices averaging $14.90 a bushel this year and $13.00 a bushel in 2014.
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