• 2017 Soybean Planting Intentions

    May 04, 2017 6:28 PM

    In our last report issued in January, we surmised that U.S. farmers could plant upwards of 90 million acres of soybeans this year. On March 31, the USDA issued its annual planting intentions report with a projection of 89.5 million acres for soybeans.1 This figure was above the average prediction and even above the highest trade estimate offered in a trader poll. This is a market surprise and is expected to put downward pressure on prices for soybeans and soybean oil. In 2016, soybean planting totaled 83.4 million acres.1

    In addition to planned acreage, the USDA reported soybean stocks as of March 1, providing another bearish surprise. Stocks of U.S. soybeans on March 1 are estimated at 1.735 billion bu., compared to 1.530 billion bu. in March 2016.2 The average trade prediction was 1.684 billion bu. Under the pressure of both of these figures, soybean futures would seem to have the potential to trade between the May futures’ low made last August at $9.35 and the May futures’ contract low at $8.70.2

    Soybean Oil Futures3

    The immediate reaction could be that soybean oil futures will also bow to this price pressure, yet the drop in soybean oil futures, after the report went public on March 1, 12 p.m. EST, has been more moderate than the immediate price reaction of soybean futures. Soybean oil futures had declined for four consecutive months through March, so we should conclude that it had already priced in a bearish scenario.3

    Soybean Oil Futures3
    Soybean Oil Futures

    In its latest supply demand forecast issued April 11, 2017, the USDA projected cash on-farm soybean prices to average $9.40-9.70 per bushel, a narrowing of the range projected in March and a reduction of just 5 cents per bushel when comparing the means of each projection.4 The USDA projected cash crude soybean oil prices to average 31-33 cents per pound, a reduction of 1.5 cents per pound when compared to the March projection.4

    References
    “Prospective Planting.” https://www.usda.gov/nass/PUBS/TODAYRPT/pspl0317.pdf United States Department of Agriculture. March 31, 2017.
    2 “Grain Stocks.” https://www.usda.gov/nass/PUBS/TODAYRPT/grst0317.pdf United States Department of Agriculture. March 31, 2017.
    3 “Soybean Oils Futures Quotes.” http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/soybean-oil.html. CME Group. March 1, 2017.
    4 “World Agricultural Supply and Demand Estimates.” https://www.usda.gov/oce/commodity/wasde/latest.pdf. United States Department of Agriculture. March 9, 2017.

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Richard GallowayAbout the Expert

Richard Galloway is president of Galloway and Associates, LLC, a business consulting firm serving domestic and foreign agricultural processing, vegetable oil refining, biodiesel and grain handling industries. Galloway is a consultant to the QUALISOY Board, a collaborative effort among the soybean industry to help market the development and availability of trait-enhanced soybean oils, including high oleic soybean oil. Read More...