Day: March 26, 2018

Soybeans For 2017-18, supply is estimated at a record 8.3 Mt, up from last year’s 7.5 Mt due to sharply higher production. Exports are forecast at a record 5.6 Mt, up from 4.4 Mt in 2016-17 on ample domestic supplies, a wide basis and the discount of the Canadian dollar against the US dollar. Domestic processing of soybeans is forecast to fall marginally from last year to 1.80 Mt, under pressure from weak soymeal prices. Carry-out stocks are projected at 0.38 Mt. Soybean prices are forecast to fall to $420 to $450/t versus $454/t for 2016-17. For 2018-19, planted area is forecast to rise by 2%, to a record 3.0 Mha, due to attractive returns in comparison to alternate crops. Production is forecast to rise slightly to a record 8.1 Mt due to higher area and higher average yields, which are based on a 5-year average. Total supply is forecast to increase by about 5% and set a new record of slightly over 8.7 Mt. In turn, this is expected to support record exports of 6.0 Mt to a diverse group of countries. Domestic processing is forecast to rise marginally to 1.9 Mt, slightly under the record pace set in 2015-16. Carry-out stocks are forecast to fall to 0.33 Mt from the 0.38 Mt anticipated for 2017-18. Soybean prices are forecast down slightly to $415 to 455/t under pressure from pressured US prices and a stable Canadian dollar-US dollar exchange rate. For 2018-19, the USDA forecasts US soybean production to decline by 2%, to 4.88 bln bu, due to a marginal decline in planted area, a 0.3 million (mln) acre increase in abandonment and a 0.6 bu/ac decline in yields from 2017-18. Supplies of soybeans are forecast to rise to a record 4.88 bln bu as the drop in output is more-than offset by a sharp rise in carry-in stocks and stable imports. Domestic processing is forecast to rise by 30 mln bu, to 1.98 bln bu, on stronger demand for soymeal while exports increase by 200 mln bu, to 2.3 bln bu, on a combination of rising world demand and anticipated production shortfall in the South American harvest. Ending stocks are forecast to tighten up slightly for the 2018-19 crop year while the average farm gate price decline by 5 cents/bu, to US$9.25/bu, under pressure from the strong US dollar. Over the long run, the USDA is forecasting US soybean plantings to exceed corn, at 91 to 92 million acres, as growing world and domestic demand supports prices and generates higher producer returns compared to corn and wheat. The growth in world demand will be driven by China, which is projected to import 143 Mt of soybeans by 2026-27, or about 36% of the approximately 400 Mt of soybeans grown world-wide. The US is projected to respond to this growth in demand by producing 4.8 billion bushels (about 131 Mt) of soybeans compared to the 4.4 billion bushels grown in 2017-18. At the world level, world trade in soybeans is projected to expand by 30%, to 205 Mt, of which about 70% will be heading to China. Three countries, Brazil, the US and Argentina, are projected to account for about 87% of the world exports in soybeans over the next 10 years. Brazil is projected to capture most of this expansion as soybean shipments rise by 45%, to about 96 Mt. The US is projected to export to 68 Mt by 2027-28 resulting in a decrease in market share from 40%, to 33% of world soybean trade. Argentine soybean exports are forecast to rise by 62%, to 14.1 Mt, mostly to China, despite the continuation of differential export taxes which favour the domestic processing of soybeans over exports of the raw seed. The USDA projects Canadian exports of soybeans to rise to 8.1 Mt by 2027-28 from 6.1 Mt in 2018-19. World trade in soymeal trade is forecast to rise by 18% to 82 Mt, about 40% of the world trade in raw soybeans, by 2027-28 on support from continued growth in livestock production and movement towards modern feed rations. Many countries are constrained in their ability to increase domestic oilseed production, thus rely on the international marketplace. The EU is projected to remain the world’s largest importer, at about 20 Mt per year, while Southeast Asia, North Africa, the Middle East and Latin America are projected to increase soymeal imports. World import demand for soyoil is also projected to grow by 27%, to slightly over 15 Mt by 2026-27, due to rising food and industrial use. Growth in world trade in soyoil is expected to be constrained by palm oil, of which production is projected to rise to about 80 Mt by 2026-27, according to the OECD-FAO. Argentina, Brazil, the US and the EU account for 80% of the world’s exports of soyoil and by 2027-28, Argentina, Brazil and the US are projected to account for 48%, 18% and 8% of the world’s exports in soyoil. Over the medium term, gains in US prices for all oilseeds, protein meals and vegetable oils are projected to be muted compared to world prices due to the strength of the US dollar. The US farmgate price for soybeans rises slowly and steadily from the US$9.30/bu projected for 2017-18, to US$9.80/bu for 2027-28. By contrast, the modern day low price for soybean prices at the farm-gate was set in 2015-16 at US$9.23/bu versus the modern day high of US$14.42/bu, which occurred in 2012-13. Over the next decade soymeal prices are projected to rise from US$320/st in 2017-18 to US$350/st in 2027-28. US soyoil prices are forecast to rise by US 4.7 cents/lb from 44.5 cents/lb to 49.2 cents/lb over the next 10 years