An analysis of U.S. and World soybean supply-demand factors and 2014 price prospects following the USDA’s July 11th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports can be found on the KSU AgManager website (http://www.agmanager.info/default.asp) early next week.
Following is a summary of the article on Soybean Market Outlook – with the full article and accompanying analysis to be available likely on Monday, July 21st on the KSU AgManager website at the following web address http://www.agmanager.info/marketing/outlook/newletters/Soybeans.asp
Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on Friday, July 11, 2014, U.S. soybean market prices have responded negatively – moving sharply lower on the day of the report, then recovering and moving in a volatile, generally sideways-to-lower trading range through July 18th. Until the end of June, U.S. soybean prices in 2014 had been supported by continued Chinese demand and uncertainty about 2014 crop production prospects in the United States. However, both old and new crop soybean market prices have moved sharply lower in anticipation of burdensome market supplies in Fall 2014.
USDA U.S. Soybean Forecast for “Old Crop” MY 2013/14
Adjustments were also made to several “current” 2013/14 marketing year usage categories, including projected imports (85 million bushels or ‘mb’), domestic crushings (1.725 billion bushels or ‘bb’ – up mb), exports (1.620 bb – up 20 mb), residual (-69 mb, down from 0 mb), ending stocks (140 mb – up 15 mb), ending stocks-to-use (4.14% – up from 3.68%), and average price ($13.00 – down $0.10 per bu). The negative soybean residual figure raises questions about potential adjustments to supply or use categories in the 2013/14 U.S. soybean balance sheet in future WASDE reports.
USDA U.S. Soybean Forecast for “New Crop” MY 2014/15
In these reports, forecasts of U.S. 2014 planted (84.839 million acres or ‘ma’) and harvested (84.058 ma) acres from the June 30th USDA Acreage report were used along with internal projections of 2014 soybean yields and production – figures that are still uncertain and subject to change in upcoming USDA reports. U.S. soybean production in 2014 was forecast to be a record high 3.800 bb – up 511 mb from a year earlier. Domestic crush was projected to be 1.755 bb – up 40 mb from the June WASDE, while exports were forecast to be 1.620 bb, up 55 mb from a year ago.
Forecast “new crop” 2014/15 ending stocks were also raised to 415 mb (up 90 mb from June, and up 275 mb from a year ago), while ending stocks-to-use were projected to be 11.7% (up from 9.4% in June, and from 4.14% in MY 2013/14). The USDA forecast that “new crop” MY 2014/15 average prices will be $9.50-$11.50 with a midpoint of $10.50 – down $0.25 /bu from June. It is important to remember that the first actual survey-based projection of 2014 U.S. soybean production will be available in the August 12th USDA Crop Production and WASDE reports.
A U.S. Soybean Field in August 2012 (Source: http://isaaablog.blogspot.com/2012)
KSU U.S. Soybean Forecast for “New Crop” MY 2014/15
KSU forecasts for “new crop” MY 2014/15 are as follows:
a) “Likely Production” Scenario: 50% prob. of 84.839 ma planted ac., 84.058 ma harvested ac., 43.0 bu/ac yield, 3.614 bb 2014 U.S. soybean crop, 3.774 bb U.S. soybean supplies, 1.720 bb crush, 1.625 bb exports, 3.456 bb total use, 318 mb ending stocks, 9.2% S/U, & $10.75 /bu;
b) “High Production” Scenario: 35% prob. of 85.058 ma planted ac., 84.983 ma harvested ac., trend yields of 44.3 bu/ac, 3.765 bb 2014 U.S. soybean crop, 3.920 bb U.S. soybean supplies, 1.755 bb crush, 1.675 bb exports, 3.541 bb total use, 379 mb ending stocks, 10.7% S/U, & $10.00 /bu, and
c) “Low Production” Scenario: 15% prob. of 83.906 ma planted, 83.133 ma harvested, lower yields of 39.0 bu/ac, 3.242 bb 2014 U.S. soybean crop, 3.412 bb U.S. soybean supplies, 1.600 bb crush, 1.500 bb exports, 3.202 bb total use, 210 mb ending stocks, 6.6% S/U, & $11.75 /bu.
South American Export Infrastructure (Source: http://www.ozy.com/wildcard/ozy-on-latin-america/)
World Soybean Supply-Demand
World production of 304.8 mmt in “new crop” MY 2014/15 is projected to be up from 283.9 mmt in “current” MY 2013/14, and from 268.0 mmt in MY 2012/13. Projected World soybean ending stocks of 85.3 mmt (30.1% S/U) in “new crop” MY 2014/15 are up from 67.2 mmt (24.9% S/U) in “current” MY 2013/14, and up from 56.8 mmt (22.0% S/U) in MY 2012/13.
Combined “new crop” MY 2014/15 soybean production for major export competitors Brazil (91.0 mmt – up 3.5 mmt) and Argentina (54.0 mmt – unchanged) is projected to be up 3.5 mmt. That said, with a large 2014 U.S. soybean crop harvest anticipated to be available in World grain export markets in Fall 2014 through late winter-spring 2015, and larger South American carryover stocks expected from “old crop” MY 2013/14, it is anticipated that World soybean production and supplies will be larger and prices sharply lower in “new crop” MY 2014/15 than a year ago.
Kansas Country Roads – Pictures by Brad Mangas (Source: http://bradmangas.com/kansas-country-roads/)