The outlook for U.S. and global soybean production continues to improve, which should mitigate price increases and help support demand for soybeans, according to USDA’s Oil Crops Outlook, released Nov. 13.
Slowing exports and rising production of soybeans have teamed up to reduce the price outlook for beans, but not by much. USDA’s latest price projection for the 2012-13 average farm price for soybeans of $13.90 to $15.90/bu. is down from last month’s estimate of $14.25 to $16.25.
"Demand had been understated," says Mike Krueger, founder and president of The Money Farm, Fargo, N.D. "Prices are now at the low end of USDA’s range now, but I think we’ll see the soybean market recover."
If weather issues develop in South America, recovery will be even steeper than what USDA projects, Krueger adds.
In its latest World Agricultural Supply and Demand Estimates, USDA raised its forecast for the U.S. soybean yield to 39.3 bushels per acre, up from its last month’s projection of 37.8 bushels.
"Most of the improvement in yield forecasts from October was for the Corn Belt regions, particularly Illinois, Indiana, and Ohio," the report notes. "Objective yield data sill confirms that pod counts were well below average this year due to a serve drought. However, considering the stress the crop endured, bean weights were exceptionally good overall."
Late season rains across the Corn Belt helped the nation’s soybean crop rebound, and record-high yields were realized across the South in Alabama, Arkansas, Louisiana, Mississippi, North Carolina, South Carolina, and Virginia.
This year’s U.S. soybean exports through Nov. 1 are at record high levels, but high prices will eventually work against exports. USDA predicts that exports of soybeans will fall below year-earlier levels by spring 2013.
The Hungry Dragon
A stronger U.S. harvest of soybeans also helped raise the outlook for global production. Based on an increase of 3.3 million metric tons, global production of soybeans for the 2012-13 marketing year is now 267.6 million metric tons.
A decline in soybean production in China along with growing meat production there, are expected to boost soybean imports to China. USDA raised its forecast for Chinese imports to 63 million metric tons, a 2 million-ton increase. Last year, China imported 59.2 million metric tons of soybeans.
"Although recent purchases of U.S. soybeans (by China) have slowed, outstanding sales commitments as of November 1 were 2.7 million tons ahead of last year’s sales due to a heavy round of buying last summer," says USDA.