• In the Prospective Plantings report, the market got what is was expecting— higher soybean plantings. However, the acres were not as big as the market was expecting. USDA projected 2015 U.S. planted soybean acres at 84.6 million acres, up 1% from last year. While well within the range of pre-report estimates of 83.1-88.0 million acres and still a record plantings, the projection was well below the average trade estimate at 85.9 million.
• This year’s prospective planting projection is subject to significant revisions later in the year. Input suppliers, as well as farmers, have commented this year that when USDA surveyed farmers about planting intentions there were more producers than usual that had not finalized their 2015 planting plans.
• Even with lower planted acres than expected, the 2015/16 U.S. soybean balance sheet is forecast to show the highest ending stocks in nearly a decade. We are currently forecasting ending stocks to be just under 500 million bushels. With higher acreage and expectations of building stocks, we are forecasting prices to continue their downward slide with futures prices at harvest in the mid-$8.00 area.
• Soybean futures have held up better than expected as the demand side has been strong. For the first half of the crop year, total U.S. soybean exports have been a record 1.55 billion bushels, 11% ahead of the last year’s pace. Likewise, according to NOPA crush data through March, U.S. crush is running 1.2% ahead of last year at 1.057 billion bushels. While exports will slow significantly as soybean exports move to South America, it is expected crush will remain strong as crush margins have rebounded above $2.00 per bushel.
• The one cautionary note on the demand side is soybean meal. In just the past couple of weeks we have seen soybean meal basis levels move significantly lower as demand has slowed with warmer weather. In addition, the outbreaks of the avian flu in turkey flocks has caused some concern that it could spread to broiler flocks due to its contagious nature. A slowdown in meal demand would slow crush and push crush margins lower.
North American AgriBusiness Review – Rabobank, April 2015