Projections Remain Excellent for the Growing Soybean Crop

August 25, 2016 10:20 PM

The U.S. Department of Agriculture (USDA) released its latest crop production projections on August 12, 2016, and soybean production is forecast to reach 4.06 billion bushels—a new record. The estimated yield per acre, 48.9 million, and acres for harvest, 83 million, break previous records.1 While these totals are very large, the futures markets reacted very moderately.  

A reason for this mild reaction was undoubtedly the forecast 2015-2016 soybean carryout of 255 million bushels versus the previous month’s forecast of 350 million bushels. In the minds of traders, the current year’s relative tightness fairly offsets the forecast abundant supply of new crop. Increases in this year’s domestic crush (up 10 million bushels) and exports (up 85 million bushels) both contributed to the lower carryout forecast, but exports were the primary factor.2

The forecast soybean oil carryout for 2015-2016 was reduced from 2,275 million lbs. to 1,950 million lbs., even with the slightly higher forecast domestic crush. This reduction in stocks was the result of a 150 million lb. increase in both forecast biodiesel feedstock and edible usage. Nevertheless, the reactions of both soybean oil and soybean meal futures were equally moderate as that of soybean futures.

The USDA forecasts price ranges for soybeans and products, as well as supply and demand estimates/projections, in its monthly World Agricultural Supply and Demand Estimates (WASDE) report. This report forecast soybean oil prices to be $0.2950 to $0.3250 per lb. next crop year—unchanged from the July WASDE report. The forecast midpoint ($0.3100) is up 1.5 cents per lb. from this year’s average price.

References
1. USDA. National Agricultural Statistics Service. http://usda.mannlib.cornell.edu/usda/current/CropProd/CropProd-08-12-2016.pdf. August 12. 2016. 
2. USDA. World Agricultural Outlook Board. http://www.usda.gov/oce/commodity/wasde/latest.pdf. August 12. 2016. 
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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...