Soybean production up, so is demand
The world is hungry for soybeans and the U.S. is expected to have plenty to deliver, according to today’s U.S. Department of Agriculture World Agricultural Supply and Demand Estimates (WASDE) Report.
Iowa Soybean Association (ISA) industry experts say demand is robust, and the U.S. will likely be the supplier of choice as summer progresses.
National soybean production is estimated at 3.88 billion bushels, according to the report. That’s up 80 million bushels from last month. The government left yield estimates unchanged at 46.7 bushels per acre, but increased the harvested area by 1.6 million acres from the previous report to 83 million acres.
Soybean crush and exports were raised 10 million and 20 million bushels, respectively, to nearly 2 billion bushels each, according to the report. And it could go up even more.
“USDA has a history of underestimating the export numbers and is going to have to make up for that,” said Grant Kimberley, ISA market development director. “We’ve seen extraordinarily strong demand for U.S. soybeans and we expect it to continue. There are several international trade groups coming to Iowa this week as part of the National Governors Association meetings and they will want to talk about soybean supply.”
Soybean ending stocks for the current marketing year are projected at 350 million bushels, down 20 million from last month, according to the report. Ending stocks for the 2016/17 marketing year were increased by 30 million bushels to 290 million.
Kimberley expects soybean ending stocks to be lower than current projections. That’s based on an Iowa State University (ISU) report issued last year funded by the ISA.
The USDA has significantly overestimated monthly soybean ending stock projections, especially in the early and mid-part of the marketing year and typically failed to readjust figures in a timely manner, the ISU report said. The study finds the overall value of the state’s soybean crop has been reduced by at least 1 percent annually the past 18 years, costing farmers tens of millions of dollars a year.
According to the WASDE Report, the U.S. season-average soybean price for 2016/17 is projected at $8.75 to $10.25 per bushel, unchanged from last month. November soybeans on the Chicago Board of Trade closed 32 cents higher today at $10.87 per bushel.
Though demand remains strong, analysts considered the WASDE Report mostly neutral for soybeans due to the projected increase in production. The weather is the key market driver going forward.
“Iowa soybeans are ahead of schedule and looking good, mostly in the blooming stage,” Kimberley said. “But there is a long growing season ahead and predicted hot weather could have a big impact.”
Commodities analyst and trader Al Kluis, owner of Kluis Commodities of Wayzata, Minnesota, said during a webinar with customers today that weather issues in South America that curtailed soybean production and exports could open more doors for U.S. soybeans. Typically, Brazil and Argentina are the No. 1 soybean exporters at this time.
“By August, the U.S. will be the only soybean exporter given the reduction in South American production,” Kluis said.