An analysis of U.S. and World soybean supply-demand factors and 2014 price prospects following the USDA’s September 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, September 29th 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 Thursday, September 11, 2014, U.S. soybean market prices have responded by moving sharply lower in anticipation of a record large U.S. soybean crop and near record large U.S. soybean supply-demand balances in Fall 2014.
USDA U.S. Soybean Forecast for “New Crop” MY 2014/15
The USDA forecast record high U.S. soybean production in 2014 of 3.913 billion bushels (bb) – up 624 million bushels (mb) from 3.289 bb in 2013, and up 554 mb from the previous record high of 3.359 bb in 2009. This USDA forecast 2014 U.S. soybean production of 3.913 bb is based on record high planted acres (84.839 million acres or ‘ma’), harvested acres (84.058 ma), and yields (46.6 ma) acres – figures that are still uncertain to some degree and subject to change in upcoming USDA Crop Production reports. In the “new crop” 2014/15 marketing year which began on Sept. 1, 2014, U.S. soybean total supplies were forecast to be a record high 4.058 bb – up 549 mb from “old crop” MY 2013/14.
Domestic crush was projected to be 1.770 bb – up 40 mb from a year ago, while exports were forecast to be a record high 1.700 bb, up from the old record of 1.645 bb in “old crop” MY 2013/14. Forecast “new crop” 2014/15 ending stocks were raised to 474 mb (the high since 574 mb in MY 2006/07), while % ending stocks-to-use were projected to be 13.3% – up from 12.1% in August, and from the record low of 3.85% in “old crop” MY 2013/14. The USDA forecast “new crop” MY 2014/15 average soybean prices to be in the range $9.00-$11.00 with a midpoint of $10.00 – down $0.35 /bu from August. The USDA will update their supply-demand, and price projections in its October, November, and January Crop Production and WASDE reports.
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: 65% prob. of 83.589 ma planted, 82.812 ma harvested, 45.0 bu/ac yield, 3.727 bb 2014 U.S. soybean crop, 3.872 bb U.S. soybean supplies, 1.707 bb crush, 1.639 bb exports, 3.448 bb total use, 424 mb ending stocks, 12.3% S/U, & $10.75 /bu; b) “High Production” Scenario: 20% prob. – essentially equal to the USDA forecast of 3.913 bb 2014 U.S. soybean crop, 475 mb ending stocks, 13.3% S/U, & $10.00 /bu, and c) “Low Production” Scenario: 15% prob. of 82.339 ma planted, 81.573 ma harvested, lower yields of 43.5 bu/ac, a 3.548 bb 2014 U.S. soybean crop, 3.698 bb U.S. soybean supplies, 1.648 bb crush, 1.583 bb exports, 3.333 bb total use, 365 mb ending stocks, 10.95% S/U, & $11.75 /bu.
World Soybean Supply-Demand
Record high projected World soybean production of 311.1 mmt in “new crop” MY 2014/15 is projected to be up from 283.1 mmt in “old crop” MY 2013/14, and from 267.8 mmt in MY 2012/13. Record high projected World soybean ending stocks of 90.2 mmt (31.6% S/U) in “new crop” MY 2014/15 are up from 66.9 mmt (24.9% S/U) in “old crop” MY 2013/14, and up from 56.8 mmt (21.9 % S/U) in MY 2012/13. Forecast South American “new crop” MY 2014/15 soybean production that will be harvested in early 2015 for major U.S. World export competitors Brazil (94.0 mmt – up 7.3 mmt from a year earlier) and Argentina (55.0 mmt – up 1.0 mmt) is projected to be up a combined 8.3 mmt or 5.9% from MY 2013/14.
World & U.S. Soybean Market Trends
If this forecast of “new crop” MY 2014/15 soybeans from South America comes to fruition along with the record large 2014 U.S. soybean production, then World soybean supply-demand balances are likely to grow to burdensomely high levels (as is now projected), with U.S. soybean prices dropping sharply down to or below MY 2008/09 and MY 2009/10, i.e., down to or below $9.97 and $9.59 per bushel, respectively. The possibility of weather-related production problems in South America during the spring of 2015, or in the United States during the summer-fall of 2015 could impact these trends, but until such issues surface the soybean market will likely assume that these “predominant trends” will continue into the foreseeable future.
Soybean harvest in Deleware in 2011 (Source: http://extension.udel.edu/kentagextension/tag/soybean/)