In its June 30, 2016 Acreage Report, the U.S. Department of Agriculture (USDA) increased estimated soybean acreage to 83.7 million, which would be a new record eclipsing the 83.3 million acres planted in 2014.1 The current yield projection by USDA is 46.7 bushels per acre, which compares to 48 bushels per acre last year and 47.5 the year before. Bottom line: we have a big crop on the horizon, assuming that favorable weather continues. The last crop condition report called the U.S. soybean crop at 71 percent good to excellent, which compares to 62 percent of the U.S. soybean crop called good to excellent one year ago.2 Last year saw a record yield per acre.
The primary driver of the domestic crush rate is soybean meal demand. Soybean oil can be stored for long periods, but soybean meal generally must be shipped out as produced. The current demand for soybean meal is good, both domestically and for export. The export demand is being aided by a short Argentine crop that was harvested during the past spring in North America (South America’s fall). The USDA forecasts a record domestic crush for the 2016-17 year3; 7 percent greater than its forecast for our current year.
In spite of the greater soybean oil production forecast for the coming year resulting from the crush to meet good meal demand, September 30, 2017 soybean oil stocks are forecast to be a very manageable 1.91 billion lbs. That’s 16 percent below the stocks expected this coming September 30. This relative tightness is the result of an increase in the projected use of soybean oil for biodiesel feedstock by 600 million lbs. over the usage expected this year. Food use and soybean oil exports are projected to be about flat with the 2015-16 year. This biodiesel usage is logical, as the renewable fuel volume requirements established by the U.S. Environmental Protection Agency annually are higher in keeping with the soybean oil usage projections.
Excellent demand for both soybean products seems relatively solid through the coming year, so the next market marker is U.S. growing, and later harvest, weather. We are on track for a big crop, but with excellent demand.
1. USDA. National Agricultural Statistics Service. http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1000. June 30, 2016.
2. USDA. Crop Progress. http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1048. July 11, 2016.
3.USDA. World Agricultural Supply and Demand Estimates Report. http://www.usda.gov/oce/commodity/wasde/index.htm. 2016.