CHESTERFIELD, Mo. — Soybean planted acres reported by the U.S. Department of Agriculture on June 30 of 88.3 million was 2.7 million less than March planting intensions, but a record soybean crop is projected, weather permitting, to meet record demand.
“The world is watching this carefully because global soy supplies are tight. Now is the time to look carefully and critically at the global environment, what your customers expect and what you expect,” said Jim Sutter, U.S. Soybean Export Council CEO, in a recent webcast.
“Russia’s war on Ukraine, the aftermath of COVID, spiking inflation and supply chain disruptions all remind us of our shared responsibility to work together. And while this is happening, our U.S. soybean farmers are focused on maximizing production of nutritious, sustainable U.S. soy so that our customers and their customers’ families around the world can reliably and readily access nutritious, safe and affordable food every day.
“Whether you’re feeding chickens, pigs, fish or people somewhere around the world, reliable U.S. soy delivers improved adjustability, improved nutrient profile and a great sustainability track record.”
Even though USDA slashed soybean acres from 91 million acres in its March report to 88.3 million acres, it’s still the highest soybean area planted since 2018, noted Mac Marshall, who serves as vice president of market intelligence for USSEC and the United Soybean Board.
“If we assume a trend yield of 51.5 bushels per acre, the reduction in planted area implies a drop in production of about 130 million bushels. However, the implied crop size would still be a record at 4.5 billion bushels,” Marshall said.
Sutter noted that these numbers are reflective of U.S. soy farmers’ adoption of innovation and sustainable intensification.
Since 1982, U.S. forestland has increased 5.2 million acres while cropland has decreased about 49.4 million acres. Additionally, U.S. soybean farmers have improved their greenhouse gas emissions, decreasing it by 43% per bushel while increasing production 130% since 1980.
“Carbon footprint matters in many markets. U.S. soy has the lowest carbon footprint compared with soy from other major origins, according to Blonk Consultants and the Global Feed LCA Institute. These things positively impact customers’ ability to have a sustainable footprint around the world,” Sutter said.
Soybean inventory levels through June 1 implied a March through May quarterly disappearance of 960 million bushels, according to the USDA quarterly stocks report.
“This would be the largest pace of demand during that quarter on record,” Marshall said. “With December-February disappearance clocking in at more than 1.2 billion bushels, total demand for U.S. soy during the past six months has been quite robust as crush remains strong and we see counter-seasonal strength in exports.”
The demand has pushed the projected 2021-2022 soybean ending stocks down to a historically low 205 million bushels.
“It’s less than last year’s carryout, and it’s part of the reason for the high prices. If we get the 51.5 bushel-per-acre yield on the current acres and we have an export program for new crop of 2.2 billion bushels, our carryout will drop to less than 150 million bushels. This is a very low carryout,” said Martin Ruikka, The ProExporter Network president.
“Given that we’re starting with a low carryout, and we have projections for a low carryout, it makes the growing season (the way the weather gets traded) riskier. Everyone is going to be on the knife’s edge for the whole growing season. We need good harvest conditions, as well. We will be in a weather market all the way through harvest in November.”
Carlos Salinas, USSEC regional director for the Americas, said he has been surprised by the “resiliency of the trade flows of U.S. soy to customers in Latin America in the context of high prices.”
For the week ending June 16, USDA reported accumulated exports of soybeans already shipped at 5.3 million metric tons to the Latin America region, compared to 5.1 million during the same time last year.
In addition, outstanding sales for U.S. soybeans — commitments that are on the books and yet to be executed — were at 1.3 million metric tons, compared to 900,000 tons during this same time last year.
Salinas said when you look at crush in destination markets, the Americas region has also benefited from expanding margins.
“It’s understandable that crushers want to have stocks on position. They want to buy ahead and very well position logistically to execute and lock in those crush margins,” he said.
Salinas noted the region is mostly a soybean meal market and accumulated exports for soybean meal in the region are at 5.6 million metric tons for soybean meal exports, compared to 5.4 million this time last year. There is also 1.8 million metric tons in “open commitments” for soybean meal.
One example is Colombia’s accumulated exports of 1.1 million metric tons, compared to 850,000 tons this same time last year. Ecuador has grown to 591,600 tons, compared to 498,000 a year ago, while Venezuela increased year-over year from 173,000 to 210,300 metric tons.
“I believe the industry realizes the importance of supply chains. While the market is inverted, buyers want to ensure they are logistically positioned and have the supply needed to feed their animals. It’s a good reaction to see, but it tells you we are a very inelastic market,” Salinas said.
“We see a slightly different story with soybean oil because we have exports for the week ending June 16 of 317,000 tons versus 380,000 during the same time last year. However, we have countries like Costa Rica which have more than doubled their shipments and Mexico surprisingly has 72,000 metric tons of soybean oil shipped already versus 36,000 last year.”
“As we all know, no harvest should be taken for granted, and it’s important because we have these tight supplies and demand continues to grow,” Sutter said.
“I believe U.S. farmers are taking extra care to be maximizing the production that they are going to grow this year. We know U.S. soy production is important to the world, especially now, and it looks to me like, given all the things they’re doing, now Mother Nature has a lot to do with it, our farmers are working extra hard to maximize their yields and grow a big crop.
“So, my money is still thinking we may grow a record crop this year, even though our acres are not quite a record level, but I think our yields will be a record level.
“Secondly, world supplies are really tight which is why prices are high and there’s a lot of risk. The reliability of our U.S. export supply chain is critical. So, make sure you’re working with our exporters. We have a lot of very reliable exporters and export systems on all sides of our country. Make sure you get your logistics and supplies are locked in.
“Finally, just as our U.S. soy farmers and our U.S. soy exporters are working hard to make sure we’re delivering to the world, our team at USSEC is doing the same thing. We’re here for you. We have teams and people around the world. We want to meet with you, answer questions, we to get you in touch with our exporters or others in our industry and making sure we’re there to help connect you with U.S. soy.”