An analysis of U.S. and World soybean supply-demand factors and 2015-2016 price prospects following the USDA’s February 10th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports, and the February 19-20th USDA Agricultural Outlook Conference is available on the KSU AgManager website (http://www.agmanager.info/default.asp).
Following is a summary of the article on Soybean Market Outlook – with the full article and accompanying analysis available 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) reports on February 10th, MAR 2015 and NOV 2015 soybean futures prices have traded generally higher, raising hopes that seasonal lows in January-mid February have occurred, and that cash prices may eventually move higher into the spring and provide returns to storage for U.S. crop producers resisting sales at sub-$10.00 cash prices.
With 1) record high 2014 South American and U.S. soybean crops, and 2) prospects for record or near-record South American and U.S. soybean production and ending stocks again in the “current crop” 2014/15 marketing year, prospects for a soybean futures price rally above say $11.00 appear limited – unless unexpected and substantial crop production or export availability problems occur in the U.S. or abroad. Absent these occurrences, price prospects seem limited until at least May-June 2015 – the main U.S. soybean planting season. After that, 2015 U.S. soybean production prospects are likely to seasonally influence soybean market prices through the remainder of this calendar year.
USDA U.S. Soybean Forecast for “current crop” MY 2014/15
The USDA maintained its forecast of record 2014 U.S. soybean production of 3.969 billion bushels (bb) – up 611 million bushels (mb) from 3.358 bb in 2013. For “current crop” MY 2014/15, USDA raised by 10 mb its projections of U.S. imports (25 mb) and total supplies (4.086 bb). Soybean crush was raised by 10 mb (1.795 bb) and exports by 20 mb (1.790 bb), with a 35 mb increase in total use (3.701 bb), leading to 35 mb decrease ending stocks (385 mb). Ending stocks-to-use are projected to be 10.4% – down from 11.2% 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 $9.45-$10.95 with a midpoint of $10.20 /bu – down from $13.00 a year ago in MY 2013/14, and from the record high of $14.40 in MY 2012/13.
USDA & KSU U.S. Soybean Forecasts for “next crop” MY 2015/16
In the USDA Agricultural Outlook Forum the USDA projected the following for 2015 and “next crop” MY 2015/16: 83.5 ma planted, 82.6 ma harvested, 46.0 bu/ac yield, 3.800 bb production, 4.205 bb total supplies, 3.775 bb total use, 430 mb ending stocks, 11.39% 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. The USDA’s forecast of 2015 planted area is 1-3 million acres less than trade expectations.
Alternative KSU forecasts for “next crop” MY 2015/16 are as follows:
A) KSU “Same Acreage” Scenario: 40% prob. of 83.701 ma planted (same as 2014), 82.692 ma harvested, trend yield of 45.1 bu/ac, 3.729 bb 2015 production, 4.129 bb U.S. soybean total supplies, 3.730 bb total use, 399 mb end stocks (vs 385 mb in 2014/15), 10.70% ending S/U (vs 11.40%), & $10.10 /bu (vs $10.20 last year).
B) KSU “Up 2 Million Acres” Scenario: 60% prob. of 85.701 ma planted (up 2.0 ma) and 84.668 ma harvested (up 1.607 ma), trend yield of 45.1 bu/ac, 3.818 bb 2015 production, 4.218 bb U.S. soybean total supplies, 3.760 bb total use, 458 mb end stocks, 12.18% ending S/U, & $9.60 /bu.
World Soybean Supply-Demand
Record high projected World soybean production of 315.1 mmt in “current crop” MY 2014/15 is projected to be up from 283.7 mmt in MY 2013/14, and from 268.8 mmt in MY 2012/13. Record high projected World soybean ending stocks of 89.3 mmt (31.9% S/U) in “current crop” MY 2014/15 are up from 66.25 mmt (24.3% S/U) in MY 2013/14, and up from 57.3 mmt (21.9 % 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 (94.5 mmt – up 7.8 mmt from a year earlier), Argentina (56.0 mmt – up 2.0 mmt), and Paraguay (8.5 mmt – up 0.3 mmt), totaling 159.0 mmt (up 10.1 mmt or 6.8% from 148.9 mmt last year).
Planting Soybeans in the Southeastern U.S. in 2014 (Source: http://southeastfarmpress.com/markets/usda-report-soybeans-look-set-acreage-record-peanuts)
2015 Brazilian Soybean and Corn Acres & Production Affected by Earlier Weather / Planting Patterns (Source: http://en.mercopress.com/2015/02/18/brazil-s-corn-and-soybean-crops-flattening-out-influenced-by-climate-conditions)