U.S soybean producers may be planning to plant fewer soybeans in 2020 than expected, but that doesn’t mean there’s any kind of a bullish scenario setting up.
In a webinar last week, Purdue University ag economists Michael Langemeier and James Mintert said the expected soybean planted area of 83.5 million acres - up from 76.1 million a year earlier but below trade guesses closer to 85 million – and a trend yield of 49.6 bu/acre could produce a crop of nearly 4.1 billion bu, potentially the fourth highest on record.
“We were at close to 4.4 billion bu for a couple years in a row (in 2017 and 2018) so it’s not quite to that level,” Mintert said of 2020 crop potential. “But that’s still a lot of soybeans.”
Also bearish, he said, is the likelihood that a heavier-than-expected supply will be carried over from the current 2019-20 crop year into 2020-21.
Although large livestock inventories will likely mean the 2019-20 domestic soybean crush comes in close to the current USDA estimate of 2.1 billion (up slightly from 2.09 billion a year earlier), Mintert said it appears exports will fall short of the forecasted 1.825 billion bu. Indeed, actual year-to-date sales and commitments were running as much as 14% behind the needed pace as of mid-March and the negative economic impacts caused by covid-19 mean trying to make up ground will be difficult.
“It’s going to be tough to catch up because of the weak economy,” Mintert said.
In last month’s supply-demand update, the USDA left its 2019-20 U.S. soybean ending stocks estimate unchanged from February at 425 million bu, representing a stocks-to-use ration around 10%. However, given the possibility exports won’t measure up, Mintert said that old-crop stocks-to-use ratio could ultimately rise to around 15%.
A heavier total supply will ultimately weigh on prices, with Mintert estimating the season average soybean price for the current marketing year could eventually settle out at around US$8.50/bu, down from the USDA’s projection of $8.70.
Source: DePutter Publishing Ltd.
Information contained herein is believed to be accurate but is not guaranteed by the parties providing it. Syngenta, DePutter Publishing Ltd. and their information sources assume no responsibility or liability for any action taken as a result of any information or advice contained in these reports, and any action taken is solely at the liability and responsibility of the user.