An analysis of U.S. and World soybean supply-demand factors and 2014-2015 price prospects following the USDA’s December 10th 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 on Monday, December 22nd 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 December 10, 2014, U.S. soybean futures market prices moved generally sideways to lower. Soybean markets will remain sensitive to changes in South American production prospects and U.S. soybean exports through early spring. The next major survey based USDA report addressing U.S. crop production for soybeans and other major crops will be the USDA Annual Crop Production Summary report to be released on Monday, January 12, 2015 along with the January 2015 Crop Production, December Grain Stocks, and U.S. Winter Wheat Seedings reports.
USDA & KSU U.S. Soybean Forecasts for “current crop” MY 2014/15
The USDA maintained its forecast of record high U.S. soybean production in 2014 of 3.958 billion bushels (bb) – up 600 million bushels (mb) from 3.358 bb in 2013, and 916 mb from 3.042 bb in 2012. The USDA raised its projection of soybean exports by 40 mb to a new record high of 1.760 billion bushels (bb) – leading to a 40 mb increase in total use up to 3.655 bb, and to a decrease in ending stocks – down to 410 mb. Percent ending stocks-to-use are projected to be 11.22% – down from 12.45% last month, but up from the record low of 2.65% in MY 2013/14. The USDA forecast “current crop” MY 2014/15 prices to be in the range $9.00-$11.00 with a midpoint of $10.00 – down from $13.00 a year ago in MY 2013/14, and from the record high of $14.40 in MY 2012/13.
The USDA’s forecast appears to have a 75% likelihood of occurring, with a 25% prob. of an alternative, “higher use / lower stocks” outcome. Following is an alternative KSU “Higher Use” Scenario forecast for “current crop” MY 2014/15: 25% prob. of 4.065 bb U.S. soybean total supplies (= USDA), 1.797 bb domestic crush (up 1% vs USDA), 1.778 bb exports (up 1% vs USDA), 3.690 bb total use (up 35 mb vs USDA), 375 mb ending stocks (down 35 mb), 10.2% ending %S/U (vs 11.2% for USDA), & $10.50 /bu (vs $10.00 for USDA).
USDA & KSU U.S. Soybean Forecasts for “next crop” MY 2015/16
In its 10 year Agricultural Baseline projections through 2024 the USDA projected the following for 2015 and “next crop” MY 2015/16 (with an adjustment by KSU for lower beginning stocks): 84.0 ma planted, 83.1 ma harvested, 46.0 bu/ac yield, 3.820 bb production, 4.245 bb total supplies, 3.766 bb total use, 479 mb ending stocks, 12.72% S/U, and $9.00 /bu price. At this time the key market factor to assess in regards to U.S. soybean production and supply-demand prospects for “next crop” MY 2015/16 is the amount of U.S. soybean acres to be planted in 2015.
Alternative KSU forecasts for “next crop” MY 2015/16 are as follows:
A) KSU “Same Acreage” Scenario: 40% prob. of 84.184 ma planted and 83.403 ma harvested (both same as 2014), trend yield of 45.1 bu/ac, 3.761 bb 2015 production, 4.186 bb U.S. soybean total supplies, 3.655 bb total use (same as 2014/15), 531 mb ending stocks (up from 410 mb in 2014/15), 14.53% ending S/U (vs 11.22% in 2014/15), & $9.25 /bu (vs $10.00 /bu in 2014/15); and
B) KSU “Up 2 Million Acres” Scenario: 60% prob. of 86.184 ma planted (up 2.0 ma) and 85.382 ma harvested (up 1.979 ma), trend yield of 45.1 bu/ac, 3.848 bb 2015 production, 4.273 bb U.S. soybean total supplies, 3.700 bb total use, 573 mb ending stocks (up from 410 mb in 2014/15), 15.49% ending S/U, & $8.75 /bu (vs $10.00 /bu in MY 2014/15 by the USDA).
World Soybean Supply-Demand
Record high projected World soybean production of 312.8 mmt in “current crop” MY 2014/15 is projected to be up from 285.3 mmt in MY 2013/14, and from 268.1 mmt in MY 2012/13. Record high projected World soybean ending stocks of 89.9 mmt (31.4% S/U) in “current crop” MY 2014/15 are up from 66.6 mmt (24.4% S/U) in MY 2013/14, and up from 56.3 mmt (21.6 % S/U) in MY 2012/13. Forecast South American “current crop” MY 2014/15 soybean production that will be harvested in early 2015 is as follows: Brazil (94.0 mmt – up 7.3 mmt from a year earlier), Argentina (55.0 mmt – up 1.0 mmt), and Paraguay (8.5 mmt – up 0.3 mmt), totaling 157.5 mmt (up 8.6 mmt or 5.8% from 148.9 mmt last year).
A U.S. Soybean field in summer (Source: http://farmprogress.com/story-looking-soybean-data-0-59111 )
A Soybean field ready to harvest near Coffeyville, Kansas in 2009 (Source: http://travellogs.us/2009%20Logs/Kansas%202009/09-53%20Coffeyville/53-09%20Soy%20Bean%20Harvest.htm)