In terms of production and exports, the United States ranks second in the world for soybeans. About 90% of the oilseeds produced in the United States are soybeans, with the other 10% coming from other oilseeds such as flax, peanuts, canola, and sunflower seeds.
This report on the Agricultural market provides projections for the coming season and reactions to how these numbers impact the U.S. soy and oil crops markets.
The Surging Demand For Soybean
Two primary sources of soybean products’ rising demand is meal and oil.
1) The demand for soybean oil has increased due to the need to lower carbon emissions in the world’s motor fuels.
2) The demand for high-protein animal feedstuffs like soybean meal has increased due to the rise in the consumption of animal protein in fast-growing nations like China. Because growth rates are outpacing increases in yield per land unit over the long run, there is an increasing demand for soybean production. This indicates that additional land must be put into cultivation each year.
Could this be accomplished without intruding on forests and other sensitive ecological areas?
Essential Facts of The Soybean Market
- The past ten years have seen a steady rise in global soybean production, driven primarily by China’s rising demand for grain.
- After surpassing 350 million tonnes during the 2018–19 marketing year due to yield improvements and acreage expansion in Brazil, global production fell below that barrier due to a challenging growing season in the U.S.
- China is responsible for 60% of all global imports, which climbed for six straight years up to 94 million tons in the 2017–18 marketing years.
- Contrary to a decade ago, the U.S.’s soybean production has remained unchanged.
Primary Factors Influencing The Soybean Market
Despite output levels remaining close to record high, the soybean industry has recently had to adapt to a weaker global demand situation. African Swine Fever, a disease that has decreased the country’s hog population and reduced its need for soybean meal, has had a negative effect on China’s protein-producing business.
After years of consistent expansion, this trend has slowed the nation’s soybean crush operations and import speed. The amount of soybeans sourced from the U.S. has decreased due to lower Chinese demand and a more dynamic supply environment brought on by greater Brazilian output levels. Soybean futures are currently trading at values much below those observed during the first half of the previous decade due to pressure from a lower U.S. share of the worldwide market.
Domestic Factors for Oil Crops Like Corn: Use, Ending Stocks
Ending stocks for the old U.S. corn harvest (2021/22) remained constant at 1.44 billion bushels. The ending stocks for the new crop in 2022/23 are expected to be lower, at 1.36 billion bushels. Based on the assumption that American farmers will plant fewer acres of maize due to high fertilizer prices, 2022 production will be 4.3% lower than in 2017. With the stock-to-use ratio for maize currently at 9.6% and the expected stock-to-use ratio for 2022–2023 at 9.3%, it is anticipated that corn stocks will continue to be relatively low. Both numbers are lower than the current ten-year average of 11.9%.
Additional Factors: Supplies, Higher Prices, Crush, Stocks, and Exports
The markets had already anticipated reduced ending stockpiles for old U.S. soybeans, primarily due to the historically robust U.S. crush and export demand. Old crop ending stocks are reduced from 260 million bushels in the WASDE report to 235 million bushels. If this is achieved, it will represent the lowest stock level at the year’s conclusion since 2015/16. More so, the ratio of global stocks to utilize in 2021/22 is 23.5%, which is about 5% lower than the average over the previous five years.
Given the possibility of a record harvest of 4.64 billion bushels, the forecast for new crops predicts increased supply. This is based on the current planting of a record 91 million acres of soybeans.
Demand-wise, the USDA anticipates a new high of 2.255 billion bushels crushed and a new high of 2.2 billion bushels exported. The USDA predicts a record-high domestic demand for American soybeans in 2022–2023, totaling 4.58 billion bushels. It is expected that the United States Department of Agriculture (USDA) will forecast a stocks-to-use ratio of 6.8% for 2022/23, which would still be lower than the 10-year average of 8.2% despite the potential for a record level in soybean production fueled by plantings.
For soybeans in 2022–2023, the USDA projects a season-average price of $14.40 a bushel. When compared to the previous year, this is up $1.15. Prices for soybean meal are anticipated to be $400 per short ton, $20 less than in 2021/22. In light of an anticipated increase in the supply of oilseed and goods in international markets, soybean oil prices are predicted to fall by $0.05 per ton to an average of $0.70 per pound.
Agricultural commodities may directly affect the pecans that will be available as food and feed in the future. If China purchases fewer corn and wheat products, fewer crops will be processed into pecans. The outlook for soybeans is somewhat positive since Asia accounts for over half of the world’s soybean production, and China is one of the world’s largest importers of soybeans.