Markets Becoming Tensely Coiled
August 01, 2001
By Brian Clancy
Markets are getting a clearer picture of current crop production prospects across North America as efforts to compile crop-district-based pictures of events in Saskatchewan combine with industry surveys in the United States to create preliminary estimates of this years output levels.
Production estimates developed by processors and exporters across North America are starting to create the mental image of an industry which is becoming tightly coiled, looking for the first piece of news which will allow prices to break out of their current malaise. Certainly, as one trader pointed out at the end of the week, the increasingly bullish tone found in soybean and grain markets is starting to boost the ambient temperature of markets.
Though seeded area ended up slightly higher than initially anticipated on account of last minute plantings of black beans in response to market conditions during the tail end of seeding, preliminary production estimates are close to expectation. Just over a million metric tons (MT) of beans should be grown this year, ensuring a tight ending stock outlook for most classes of beans grown in the United States.
The only production number attracting some controversy was for pinto beans in North Dakota. The committee used previous 10-year average yields in its published estimates, a number deemed low by most market participants. This was reflected in the table prepared by STAT Market Research (see page 5), which boosted the projected pinto bean yield in North Dakota from 1,275 pounds per acre to 1,400 pounds.
There were no real surprises in the ending stock estimates for most classes of beans. Great Northern beans are the only exception, with historic sales suggesting the NDBC estimate is low. Actual sales numbers generated by the U.S. Bureau of Census and domestic consumption numbers developed by the USDA suggest fewer beans were used during each of the previous two seasons than shown by processors. This does not change the fundamental outlook for this class of bean. Supplies should tighten cross the 2001-02 season as demand remains ahead of production.
The biggest surprises probably come from California, where processors believe seeded areas of baby and large lima beans are down precipitously from last year. Processors believe less than 13,000 acres of each class of bean was planted this year, resulting in forecasts that baby lima production will not exceed 12,000 MT this year, while under 12,500 MT of large lima beans may be grown.
Crop conditions in Canada showed signs of improvement during the past week and forecasts for the coming week see a marked increase in the chance of precipitation each day. The change is reflected in a dramatic reduction in the size of the drought zone in Saskatchewan. While the change is too late for that percentage of crops in flowering, the yield potential of the rest of the crop is not yet fixed.
Such observations leave STAT Market Research hesitant to reduce projected yields for most crops grown in Saskatchewan. Its latest numbers make it clear the situation is not as bad as the market bulls believe, but not nearly as good as the bears hope.
Clancy is editor of STAT, a specialty crop marketing newsletter. Contacts are phone: (604) 535-8505; website: www.statpub.com; mailing address: PMB 803, 250 H St., Blaine, WA 98230