KSU Soybean Market Outlook in Late May 2015 – 3 Possible Market Outcomes in MY 2015/16

An analysis of U.S. and World soybean supply-demand factors and 2015-2016 price prospects following the USDA’s May 12th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports is available on the KSU AgManager website (http://www.agmanager.info/default.asp).

Following is a summary of the article on Soybean Market Outlook in Late May – 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

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Summary

Overview

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on May 12th, soybean futures prices have moved lower. Near term U.S. soybean market price prospects are limited by a) record high 2014 South American and U.S. soybean crops and burgeoning World soybean stocks, b) prospects for record or near-record South American and U.S. soybean production and ending stocks again 2015, and c) the rising value of the U.S. dollar – putting U.S. soybeans at a disadvantage to those available from South America (with their “weaker” currencies). Soybean price prospects seem limited until June-July 2015 – the when questions about late planting problems in the U.S. in 2015 are answered. After that, 2015 U.S. soybean production prospects are likely to influence soybean markets through fall harvest.

Longer term, the strong upward trend in World soybean production since MY 2008/09 has “out-paced” the increase in World soybean use over the same period, leading to record World soybean ending stocks and stocks-to-use, and to a dramatic reduction in price prospects in the coming year. Absent major unforeseen crop production problems in the U.S. and South America in “new crop” MY 2015/16, low prices and poor profitability are likely to cause a scaling back of production by World farmers in MY 2016/17 and beyond.

USDA U.S. Soybean Projection for “New Crop” MY 2015/16

The USDA forecast 2015 U.S. soybean production of 3.850 billion bushels (bb) – down 119 million bushels (mb) from the record high of 3.969 bb in 2013. For “new crop” MY 2015/16, USDA projected U.S. total supplies at a record 4.230 bb (vs 4.091 bb in “current” MY 2014/15), crush at 1.825 bb (up 20 mb), exports at 1.775 bb (down from the record 1.800 bb), total use at 3.729 bb (vs record of 3.741 bb), and ending stocks at a 9 year high of 500 mb (vs 350 mb). Ending stocks-to-use are projected at 13.41% – up 9.36% in “current” MY 2014/15, and the record low of 2.65% in MY 2013/14. The USDA forecast “new crop” MY 2015/16 prices to be in the range $8.25-$9.75 (midpoint = $9.00 /bu) – down from $10.05 in MY 2014/15, $13.00 in MY 2013/14, and the record high of $14.40 in MY 2012/13.

KSU U.S. Soybean Forecasts for “New Crop” MY 2015/16

A) KSU “Normal Crop” Scenario: 30% prob. of 84.635 ma planted, 83.696 ma harvested, trend yield of 45.1 bu/ac, 3.775 bb 2015 production, 4.155 bb U.S. soybean total supplies, 3.682 bb total use, 473 mb end stocks, 12.85% ending S/U (vs 9.36% in MY 2014/15), & $9.25 /bu (vs $10.05 in MY 2014/15).

B) KSU “Normal-Large Crop” Scenario: 50% prob. of 86.701 ma planted, 85.739 ma harvested, trend yield of 45.1 bu/ac, 3.867 bb 2015 production, 4.247 bb U.S. soybean total supplies, 3.742 bb total use, 505 mb end stocks, 13.50% ending S/U (vs 9.36% in MY 2014/15), & $8.90 /bu (vs $10.05 in MY 2014/15).

C) KSU “Short Crop” Scenario: 20% prob. of 86.701 ma planted, 85.739 ma harvested, low yield of 40.0 bu/ac, 3.430 bb 2015 production, 3.820 bb U.S. soybean total supplies, 3.543 bb total use, 277 mb end stocks, 7.82% ending S/U (vs 9.36% in MY 2014/15), & $10.65 /bu (vs $10.05 in MY 2014/15).

World Soybean Supply-Demand

Record high projected World soybean production of 317.3 mmt in “new crop” MY 2015/16 is forecast equal to 317.25 mmt in “current” MY 2014/15, and up from 283.25 mmt in MY 2013/14. Forecast South American “new crop” MY 2015/16 soybean production is as follows: Brazil (97.0 mmt – up 2.5 mmt from a year earlier), Argentina (57.0 mmt – down 1.5 mmt), and Paraguay (8.8 mmt – up 0.3 mmt), totaling 162.8 mmt (up from 161.5 mmt last year).

World soybean exports of 122.0 mmt in “new crop” MY 2015/16 are up from 117.5 mmt in “current” MY 2014/15, and up from 112.9 mmt in MY 2013/14. Record high projected World soybean ending stocks of 96.2 mmt (31.6% S/U) in “new crop” MY 2015/16 are up from 85.5 mmt (29.3% S/U) in “current” MY 2014/15, and up from 63.4 mmt (23.1 % S/U) in MY 2014/15.

https://i2.wp.com/farm8.staticflickr.com/7291/8741367904_07a1231f76_b.jpg

Planting Soybeans in Iowa in Early-Mid May 2015 (Source: http://www.iasoybeans.com/TheBeanBlog/?tag=planting)

 

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