KSU Soybean Market Outlook in June 2015 – Acreage and Production Questions to be Answered

An analysis of U.S. and World soybean supply-demand factors and 2015-2016 price prospects following the USDA’s June 10th 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 – 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/archives/GRAIN-OUTLOOK_06-22-15_Soybeans.pdf

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Summary

Overview

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on June 10th, soybean futures prices moved first moderately lower and then sharply higher. Near term U.S. soybean market price prospects are limited by a) record 2014 South American and U.S. soybean crops leading to 33% growth in “current” MY 2014/15 World soybean stocks, b) prospects for record 2015 South American and near record U.S. soybean production – resulting in 11% more growth in ending stocks again “new crop” MY 2015/16, and c) the high value of the U.S. dollar – putting U.S. soybeans at a disadvantage to exportable supplies from South America (with their “weaker” currencies).

Soybean price prospects seem limited through July-August 2015 – when questions about potential U.S. production problems may be answered. That said, IF major World geopolitical conflicts and/or financial market problems occur, grain markets could be extremely volatile, but the direction of such potential grain price changes is difficult to predict.

Longer term, since MY 2008/09 the strong upward trend in World soybean production (up 7.1% annually) has “out-paced” the increase in World soybean use (up 5.4% per year), leading to record World soybean ending stocks and percent 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 World production 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 2014. For “new crop” 2015/16, USDA projected U.S. total supplies at a record 4.210 bb (vs 4.091 bb in 2014/15), crush at 1.830 bb (up 5 mb), exports at 1.775 bb (down from the record 1.810 bb in 2014/15), total use at 3.734 bb (vs record of 3.761 bb in 2014/15), and ending stocks at a 9 year high of 475 mb (down 25 mb and up from 330 mb in 2014/15). Ending stocks-to-use are projected at 12.72% – up from 8.77% in 2014/15, and the record low of 2.65% in 2013/14. The USDA forecast “new crop” 2015/16 prices to be in the range $8.25-$9.75 (midpoint = $9.00 /bu) – down from $10.05 in 2014/15, $13.00 in 2013/14, and the record high of $14.40 in 2012/13.

Kansas State University 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, 4.135 bb U.S. soybean total supplies, 3.682 bb total use, 453 mb end stocks, 12.30% ending S/U (vs 8.77% in “current” MY 2014/15), & $9.15 /bu (vs $10.05 in “current” 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, 4.227 bb U.S. soybean total supplies, 3.742 bb total use, 485 mb end stocks, 12.96% ending S/U (vs 8.77% in “current” MY 2014/15), & $8.90 /bu (vs $10.05 in “current” 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, 3.800 bb U.S. soybean total supplies, 3.543 bb total use, 257 mb end stocks, 7.25% ending S/U (vs 8.77% in “current” MY 2014/15), & $10.75 /bu (vs $10.05 in “current” MY 2014/15).

World Soybean Supply-Demand

Record high World soybean production of 317.6 mmt in “new crop” MY 2015/16 is down from 318.25 mmt in “current” 2014/15, and up from 283.25 mmt in 2013/14. “New crop” MY 2015/16 soybean production in Brazil (97.0 mmt – up 2.5 mmt from a year earlier), Argentina (57.0 mmt – down 2.5 mmt), and Paraguay (8.8 mmt – up 0.3 mmt), total 162.8 mmt (up from 162.5 mmt last year). Record high projected World soybean ending stocks of 93.2 mmt (30.5% S/U) in “new crop” MY 2015/16 are up from 83.7 mmt (28.5% S/U) in “current” 2014/15, and up from 62.8 mmt (22.8 % S/U) in 2013/14.

https://i0.wp.com/kansasagnetwork.com/wp-content/uploads/2013/11/Soybean-Field.jpg

Kansas Soybean Fields (Source: http://kansasagnetwork.com/2013/trans-fat-ban-could-cut-u-s-soybean-acres/)

 

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