KSU Soybean Market Outlook: Examining Market Prospects for “Next Crop” MY 2016/17

An analysis of U.S. and World soybean supply-demand factors and late 2015-2016 price prospects is provided following the USDA’s April 12th World Agricultural Supply Demand Estimates (WASDE) reports, the March 31st USDA NASS Prospective Plantings report, the March 31st USDA quarterly Grain Stocks Report, and the February 25-26 USDA Agricultural Outlook Forum .   The full KSU Soybean Market Outlook in April 2016 will be available on March 26, 2016 on the KSU AgManager website (http://www.agmanager.info/default.asp).

Following is a summary – with the full analysis-article for soybean to be found at this web location:  http://www.agmanager.info/marketing/outlook/newletters/Soybean.asp




Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on April 12th, soybean futures prices have moved sharply higher.  To date in the “current” 2015/16 marketing year, soybean market prices in the U.S. and World have been limited by the current “large crop – low price” scenario, caused by consecutive record 2014, 2015 and projected 2016 South American and U.S. soybean crops.  However, recent significant crop production problems have occurred in key South American production areas such as Argentina and parts of Brazil.  The current market oversupply situation is illustrated by 28% growth over a two year period in World soybean stocks, from 61.8 mmt (22.4% stocks/use) in the MY 2013/14 up to 79.0 mmt (25.0% stocks/use) in the “current crop” MY 2015/16.  To make export sales of U.S. soybeans even more challenging, the high value of the U.S. dollar relative to declining or low currency exchange rates of foreign soybean export competitors in South America has had some negative impact on U.S. exports and prices. However, with limited numbers of major exporting countries available to buy from in the World market, the negative impact has been more limited than it has been for U.S. wheat trade.

In April excessive rainfall has caused problems with the Argentina 2016 soybean crop, adding to ongoing dry conditions in some key Brazilian soybean production areas in recent months. Once the extent of these threats to soybean production in these countries is adequately quantified, then World soybean markets will turn their attention to spring-summer-fall soybean crop prospects in the United States.  The key issue will be to determine whether any weather or disease problems end up driving U.S. soybean production low enough to alter the current “large supply” “buyer’s market” situation that now exists in U.S. and World soybean markets.

Longer term, since MY 2008/09 a strong upward trend in World soybean production (up 7.3% annually) has “out-paced” the increase in World soybean use (up 6.1% per year), leading to record World soybean ending stocks and growth in percent ending stocks-to-use, and consequently to a dramatic reduction in soybean price prospects in the “current” and anticipated “next” crop years.  Absent any major unforeseen crop production problems in the U.S. and South America in year 2016, low prices and poor profitability this coming fall are likely to cause either a scaling back or “leveling” of World soybean production in 2017 and beyond.

USDA U.S. Soybean Forecast of “Current Crop” MY 2015/16

The USDA maintained its forecast 2015 U.S. soybean production of a record 3.929 billion bushels (bb) – up marginally from 3.927 bb in 2014.  For “current crop” 2015/16, USDA projected U.S. total supplies at a record 4.150 bb (vs 4.052 bb in MY 2014/15), crush at 1.870 bb, exports at 1.705 bb (up 15 mb from March, but still down from the record 1.843 bb in “old crop” MY 2014/15), total use at 3.705 bb (up 15 mb but less than the record of 3.862 bb in “old crop” MY 2014/15), and ending stocks at a 9-year high of 445 mb (down 15 mb, but still up from 191 million bushels or ‘mb’ in “old crop” MY 2014/15, and 92 mb in MY 2013/14).   Ending stocks-to-use are projected at 12.01% – up dramatically from 4.95% in “old crop” MY 2014/15, and the record low of 2.65% in MY 2013/14.  The USDA forecast “current crop” MY 2015/16 prices to be in the range $8.50-$9.00 (midpoint = $8.75 /bu) – down from $10.10 in “old crop” MY 2014/15, $13.00 in MY 2013/14, and the record high of $14.40 in MY 2012/13.

USDA Forecast for “Next Crop” MY 2016/17

An adjusted version of the USDA’s “next crop” MY 2016/17 forecast for U.S. soybeans is presented here, building on the information presented by the USDA at its Agricultural Outlook Forum in Arlington, VA on February 25-26, with 2016 U.S. soybean planted acres equal to the March 31st Prospective Planting report forecast.  The USDA projected 2016 U.S. soybean plantings of 82.236 million acres (ma) – down 414,000 acres from 2015.  Forecast 2016 harvested acres of 81.257 ma is developed using longer term KSU harvested-to-planted acreage estimates (98.8%), and would be down 1.592 ma vs 2015.

With projected yields of 46.7 bu/ac, 2016 U.S. soybean production is projected to be 3.795 bb – 3rd highest on record behind 3.927 bb in 2014 and 3.929 bb in 2015.   With forecast “next crop” MY 2016/17 total use of 3.850 bb (2nd highest behind 3.862 bb in “old crop” MY 2014/15), and an adjusted projection of ending stocks of 420 mb (10.91% S/U), U.S. soybean prices were estimated by the USDA to be $8.50 /bu at the 2016 Ag Outlook Forum – down from the USDA’s $8.75 /bu midpoint estimate for “current” MY 2015/16.

KSU Forecasts for “Next Crop” MY 2016/17

Three alternative KSU-Scenarios for U.S. soybean supply-demand and prices are presented for “next crop” MY 2016/17, with each assuming a 1.500 ma upward adjustment in 2016 U.S. soybean planted acres from the USDA’s March 31st Prospective Plantings report.

A) KSU-Scenario A (Higher Acres & Trend Yield) (30% probability) assumes for “next crop” MY 2016/17: 83.736 ma planted, 83.739 ma harvested, 45.85 bu/ac yield, 3.794 bb production, 4.269 bb total supplies, 3.726 bb total use, 546 mb ending stocks, 14.57% S/U, & $8.25 /bu U.S. soybean average price;

B) KSU-Scenario B (Higher Acres & Moderate Crop Stress) (25% prob.) assumes 83.736 ma planted, 82.739 ma harvested, 44.0 bu/ac yield, 3.641 bb production, 4.116 bb total supplies, 3.653 bb total use, 463 mb ending stocks, 12.67% S/U, & $8.60 /bu U.S. soybean price; and

C) KSU-Scenario C (Higher Acres & Extreme Drought) (10% prob.) assumes 83.736 ma planted, 82.739 ma harvested, 39.0 bu/ac yield, 3.227 bb production, 3.702 bb total supplies, 3.426 bb total use, 276 mb ending stocks, 8.1% S/U, & $10.00 /bu U.S. soybean price.

World Soybean Supply-Demand

World total supplies of 397.9 million metric tons (mmt) are projected for “current” MY 2015/16, up 4.3% from 381.3 mmt in “old crop” MY 2014/15, and up 17.8% from 337.9 mmt in MY 2013/14.  Projected World soybean ending stocks of 79.0 mmt (25.0% S/U) in “current” MY 2015/16 are up moderately from 77.7 mmt (25.9% S/U) in “old crop” MY 2014/15, and from 61.8 mmt (22.4% S/U) in MY 2013/14.

World soybean supplies and ending stocks have been growing in recent marketing years, but usage has grown at an equal or greater pace.  These trends have led to the result that percent ending stocks-to-use is lower in “current crop” MY 2015/16 (25.0%) than in “old crop” MY 2014/15 (25.8%) – a positive sign for future trends in World soybean markets.

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Considering Narrow Row Soybeans in the Eastern Corn Belt (Source: http://www.hoosieragtoday.com/narrow-row-soybeans-have-yield-advantage/ )


Picturesque Western Kansas near Scott Lake State Park (Source: http://www.tourist-destinations.com/2015/01/kansas-usa.html)


One comment on “KSU Soybean Market Outlook: Examining Market Prospects for “Next Crop” MY 2016/17

  1. David Baquero Lindo says:

    Thanks a lot for your analysis and information. Kind regards

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