Soy Production Down but Supplies to Remain Heavy

U.S. farmers didn’t plant and won’t harvest nearly as many soybeans this year but supplies figure to remain heavy regardless.

Reflecting the poor spring seeding conditions, the USDA in updated supply-demand estimates on Monday lowered its 2019 soybean planted and harvested area estimates to 76.7 million and 75.9 million acres, respectively, down from 80 million and 79.3 million in July and 80 million and 79.3 million a year earlier.

With the average expected soybean yield holding unchanged from last month at 48.5 bu/acre (versus 51.6 bu in 2018), production for this year is estimated at 3.68 billion bu, down from 3.845 billion last month and a hefty 19% below the 2018 crop.

However, with lower production partly offset by higher beginning stocks, soybean supplies for 2019-20 are still projected at 4.77 billion bu, down only 3% from last month as total estimated demand for 2019-20 is also projected weaker compared to July.

At 755 million bu, estimated 2019-20 soybean ending stocks are down only 20 million bu from July and remain historically heavy – albeit nearly 30% below 2018-19.

Soybean futures were down about 14 cents in early afternoon trading.

The bulk of the decline in soybean planted/harvested area from July was concentrated in Ohio and South Dakota, where this season’s planting delays were among the worst in the entire U.S. In Ohio, soybean harvested area is now seen at 4.17 million acres, down from 4.69 million in the USDA’s June acreage report. At 3.46 million acres, estimated South Dakota soy harvested area is down nearly 1 million acres from June.

In terms of yields, the average for South Dakota is pegged at 45 bu/acre, down only 1 bu from last year, while the Ohio average, at 48 bu/acre, is down a major 10 bu from 2018. The average Illinois yield is also estimated down 10 bu from 2018 at 55 bu/acre, while the average Iowa yield is seen at 55 bu/acre, a drop of just 2 bu from a year earlier. The average Michigan yield is projected down 3 bu from last year at 45 bu/acre.

On the demand side, forecasted 2019-20 soybean exports are reduced 100 million bu this month to 1.78 billion “reflecting reduced global import demand, mainly for China.”

The U.S. season-average soybean price for 2019-20 is estimated at $8.40/bu, unchanged from last month. The soybean meal and oil price forecasts are also unchanged at $300/short ton and 29.5 cents/lb, respectively.

This month’s supply-demand changes for 2018-19 include reduced soybean crush, reflecting lower domestic use and exports of soybean meal. Old-crop soybean ending stocks are projected at 1.07 billion bu, up 20 million from July.

World soybean ending stocks for 2019-20 are estimated at 101.74 million tonnes this month, down from 104.53 million in July and 114.53 million the previous year. Soybean output in Brazil and Argentina for 2019-20 is pegged at 123 million and 53 million tonnes, unchanged from last month.

Source: DePutter Publishing Ltd.

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