Nov. 27 (Bloomberg) -- Prices of soybeans and other oilseeds are undervalued because of production risks in South America and an outlook for “unusually” small inventories at the start of 2013, Oil World wrote.
World soybean stocks are forecast to fall to 49.3 million metric tons in the first quarter of 2013 from 70.1 million a year earlier, the lowest in at least five years, the Hamburg-based researcher wrote in an e-mailed report.
Stockpiles will drop to 39 percent of the September-to-February consumption level, from a year-earlier stocks-to-use ratio of 55 percent, Oil World said. The low stocks will make consumers “heavily dependent” on South American supplies, the researcher wrote.
“There is hardly any cushion against major crop problems caused by poor weather in South America,” Oil World wrote. “There is an urgent need for rapid disposals of the new-crop South American supplies early in the season. Harvest delays and, in particular, any logistical constraints could become problematic for consumers.”
Delays getting the South American crop to market could spark a “demand-driven price rally,” according to Oil World.
U.S. soybean stocks are predicted to slide to 29.5 million tons as of March 1, from 40 million tons a year earlier, while China’s stockpiles of the oilseed are forecast to be 10.8 million tons, the lowest in four years. That compares with 15.3 million tons in 2012.
In Brazil, soybean inventories as of Jan. 1 are forecast at 1 million tons from 5.4 million tons at the start of 2012.
“Exports in the second half of this season will depend on the outcome of the South American soybean crop, the start and progress of harvesting, the pace of farmer selling as well as the logistics,” Oil World said.
Soybean production in five South American countries including Brazil and Argentina is forecast to jump to 149.2 million tons next year from 116.6 million tons in 2012, Oil World wrote.
Brazil’s soybean crop is forecast to climb to 81 million tons from 66.8 million tons, production in Argentina is seen rising to 54 million tons from 40.5 million tons and output in Paraguay may advance to 8.6 million tons from 4.5 million tons.
Flooding damage in Argentina may keep the area planted with soybeans below intentions, while weather was unfavorably dry in Brazil’s southern states, according to Oil World.
“It may become very dangerous for the consumers if they reduce stocks too much ahead of the South American harvest because it may take somewhat longer than expected until sufficient new-crop supplies arrive,” Oil World wrote.
World soybean exports in the September-to-February period are forecast to fall to 40.7 million tons from 42.8 million tons, the researcher wrote. U.S. shipments will jump to 29.5 million tons from 24.5 million tons in the year-earlier six months, while deliveries from South America will slump to 7.4 million tons from 15.4 million tons, according to Oil World.
Shipments in the period from March to August next year are predicted to climb to 59 million tons from 52.1 million tons. Exports from South America are expected to jump to 51.1 million tons from 37.2 million tons, while those from the U.S. drop to 6.3 million tons from 12.6 million tons.
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