The world is hungry for soybeans and the U.S. is expected to have plenty to deliver, according to today’s U.S. Department of Agriculture World Agricultural Supply and Demand Estimates (WASDE) Report.

Industry experts say demand is robust, and the Iowa Soybean Association believes the U.S. will likely be the supplier of choice as summer progresses.

National soybean production is estimated at 3.88 billion bushels, according to the recent U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimates (WASDE) report.

“That’s up 80 million bushels from last month,” state ISA in a news release. “The government left yield estimates unchanged at 46.7 bushels per acre, but increased the harvested area by 1.6 million acres from the previous report to 83 million acres.”

“USDA has a history of underestimating the export numbers and is going to have to make up for that,” Grant Kimberley, ISA market development director, said. “We’ve seen extraordinarily strong demand for U.S. soybeans and we expect it to continue. There are several international trade groups coming to Iowa as part of the National Governors Association meetings and they will want to talk about soybean supply.”

Kimberley expects soybean ending stocks to be lower than the current projection of 350 million bu. (down 20 million bu. from last month. That’s based on an Iowa State University (ISU) report issued last year funded by the ISA.

The USDA has significantly overestimated monthly soybean ending stock projections, especially in the early and mid-part of the marketing year and typically failed to readjust figures in a timely manner, the ISU report said. The study finds the overall value of the state’s soybean crop has been reduced by at least 1 percent annually the past 18 years, costing farmers tens of millions of dollars a year.

According to the WASDE Report, the U.S. season-average soybean price for 2016/17 is projected at $8.75 to $10.25 per bushel, unchanged from last month. November soybeans on the Chicago Board of Trade closed 32 cents higher today at $10.87 per bushel.

Though demand remains strong, ISA reported that analysts considered the WASDE Report “mostly neutral for soybeans due to the projected increase in production.” The weather is the key market driver going forward.

“Iowa soybeans are ahead of schedule and looking good, mostly in the blooming stage,” Kimberley said. “But there is a long growing season ahead and predicted hot weather could have a big impact.”

“Weather issues in South America that curtailed soybean production and exports could open more doors for U.S. soybeans, Al Kluis, owner of Kluis Commodities in Wayzata, Minn. said. “Typically, Brazil and Argentina are the No. 1 soybean exporters at this time.

“By August, the U.S. will be the only soybean exporter given the reduction in South American production,” Kluis added.

Supply Uncertainty
From Darrell Good, Department of Agricultural and Consumer Economics, University of Illinois

November 2016 soybean futures traded to a high of $11.86 per bushel on June 13, $3.22 above the low reached on November 10, 2015, reported Darrell Good, professor in the department of agricultural and consumer economics at the University of Illinois in farmdocDaily this week. The price of that contract declined to $10.21 on July 8 and is currently trading near $10.65.

“As is typically the case this time of year, price direction will now be mostly determined by U.S. crop prospects, with the pace of consumption playing a minor role,” he said.

“The increase in prices that began this past spring was associated with surprisingly low planting intentions in the U.S., late season crop problems in Argentina that fueled an increase in U.S. export sales, and some early season crop concerns in the U.S.,” Good said. “The price decline that began in mid-June was associated with improved U.S. weather and very high crop condition ratings.”

Good noted the ratings, along with the USDA's June 30 Acreage report (which revealed soybean plantings exceeded March intentions by 1.4 million acres), pointed to prospects for a very large crop.

“Forecasts of an upcoming period of above normal temperatures in the U.S., a continuation of strong export sales, and a strong pace to the domestic crush have helped support the recent modest price rally,” Good said.

On the demand side of the soybean market, Good said the new export sales of U.S. soybeans have been unusually large for the past two months. He pointed out that unshipped export sales as of June 30 were reported at 266 million bushels, compared to only 100 million bushels at the same time last year.

“While export sales have been large, the pace of export shipments has remained relatively low,” he said. “In last month's WASDE report, the USDA forecast current marketing year soybean exports at 1.76 billion bu. With just under eight weeks remaining in the year, a combination of weekly USDA export inspection estimates and monthly Census export estimates indicate that cumulative exports have reached 1.697 billion bushels. Weekly exports now need to average about eight million bushels through August in order to reach the USDA projection.”

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