It now appears that shipments will exceed this projection, and USDA is expected to reveal a larger projection on February 8. Spreading restrictions on meat and bone meal feeding throughout the world are improving the prospects for soybean and soybean meal demand. Restrictions on feeding in South America may keep more of the 2001 soybean crop at home, rather than in the world market. Some of the positive impact of reduced meat and bone meal feeding on soybean meal demand may be offset by reductions in beef cattle numbers, particularly in Europe. The recent developments on the export front have helped corn and soybean prices recover from the sharp decline following the January 11 USDA reports.
Some additional recovery is possible if export sales continue to be large.
The increase will come grudgingly as long as South American crop prospects are good. Higher prices in the near term would likely require some additional fundamental support, such as late season dryness in South America. Beyond February, the market will obviously begin to focus more on potential production in the U.S. in 2001. The USDA's March 30 Prospective Plantings report will be extremely important. The intentions for switching corn acres to soybeans will be of most interest, but the likely plantings of sorghum and spring wheat will also have important implications.