USDA forecasts the 2016/17 soybean crop down 3 percent to 3.8 billion bushels based on farmer intentions for a 1-percent decline in sown acreage (to 82.2 million acres) and a lower expected yield. A trend yield for soybeans in 2016/17 is estimated at 46.7 bushels per acre. USDA forecasts a strong recovery in new-crop exports to an all-time high of 1.885 billion bushels.
Similarly, record crush demand, at a forecast 1.915 billion bushels in 2016/17, is based on equivalent increases for soybean meal exports and domestic use. The combined increase in crush and export demand could slash season-ending soybean stocks by 24 percent to 305 million bushels. For 2016/17, USDA forecasts the U.S. season-average farm price at $8.35-$9.85 per bushel.
Smaller Soybean Crop, Record Use in 2016/17 to Shrink U.S. Stocks
USDA forecasts the 2016/17 soybean crop at 3.8 billion bushels, which if realized, would be 3 percent lower than last year’s harvest. Lower soybean production is based on intentions for a 1-percent decline in sown acreage (to 82.2 million acres) and a lower expected yield. A trend yield for soybeans in 2016/17 is estimated at 46.7 bushels per acre, compared to last year’s record average yield of 48 bushels.
Despite a moderately smaller U.S. soybean crop forecast, higher beginning stocks may edge the total supply 2 percent higher to a record 4.23 billion bushels. Even so, the forecast carryin (400 million bushels) is down 40 million bushels from last month. Forecasts of 2015/16 soybean exports and domestic use have revived partly due to weather-related harvest delays and crop losses in Argentina.
For 2015/16, a final tally of U.S. soybean exports is forecast up 35 million bushels from last month’s forecast, to 1.74 billion bushels. An improved outlook for the domestic soybean crush, which is raised 10 million bushels to 1.88 billion, also contributes to a lower expected carryover. The export market is expected to absorb the additional output of soybean meal, with U.S. shipments forecast up 300,000 short tons in 2015/16 to 11.5 million.
In 2016/17, U.S. soybean exports would benefit from further tightening of South American soybean supplies and global rapeseed supplies. USDA forecasts a recovery in the U.S. share of global trade, with the potential for new-crop exports to surge to an all-time high of 1.885 billion bushels. Similarly, record crush demand is seen in 2016/17 at 1.915 billion bushels based on equivalent increases for soybean meal exports and domestic use.
Exports of U.S. soybean meal are forecast up 4 percent from 2015/16 to 12 million short tons as the rate of shipments slows from Argentina and Brazil. Domestic soybean meal consumption may grow more slowly compared to the previous 2 years but is forecast to register a 1.5-percent increase to 33.8 million tons.
The combined increase in soybean demand could slash season-ending stocks by 24 percent to 305 million bushels in 2016/17.
A declining surplus of soybean stocks would reverse a 3-year downward trend in prices, which have already strengthened substantially this spring. For 2016/17, USDA forecasts the U.S. season-average farm price at $8.35-$9.85 per bushel, compared to a 2015/16 average of $8.85 per bushel.
Although harvest-time soybean prices are likely to be considerably lower, the current price rally is providing farmers an opportunity to forward contract for fall delivery in a range of $9.75-$10.25 per bushel. Central Illinois soybean meal prices also rallied in April to an average $304 per short ton (from the March average of $276).
This was set off by crop losses in Argentina–the world’s top exporter of soybean meal. Support for prices is also bolstered by an appreciation of major foreign currencies against the U.S. dollar to their highest levels in nearly a year. The 2016/17 average price for soybean meal is forecast at $300-$340 per short ton versus $310 for 2015/16.
For soybean oil, demand gains in 2016/17 may also exceed the increase in supplies. Domestic use of soybean oil is forecast growing nearly 4 percent to 20.3 billion pounds. Based on higher mandated blending levels for 2016 and 2017, soybean oil consumption for biodiesel may expand 5.5 percent to 5.8 billion pounds.
A nearly 3-percent growth in the edible use of soybean oil may follow from the minimal supply increases for other vegetable oils. Shrinking soybean and soybean oil stocks would likely extend the upward trend in prices since last fall. The 2016/17 average price for soybean oil is forecast at 30.5-33.5 cents per pound compared to the 2015/16 average of 30 cents.
Lower U.S. Canola Supplies Expected to Spur Oil and Meal Trade
U.S. planting intentions for canola are down slightly in 2016/17 to 1.75 million acres from 1.78 million last year. If canola yields also decline from the 2015/16 record, domestic production could fall 3 percent. Canola demand for 2016/17 is forecast down by 5 percent to 3.53 billion pounds, with the forecast crush down by 183 million pounds from the previous year to 3.22 billion pounds.
Although domestic production of canola oil in 2016/17 may be slightly lower, consumption could be supported with a 3-percent increase in U.S. imports to 3.8 billion pounds. Canola meal exports are also forecast to be up 3 percent from 2015/16 to 4.35 million short tons.
Lower Sunflowerseed Production May Offset Higher Beginning Stocks
In 2016/17, sunflowerseed planted area may decline 9 percent from the previous year. Total U.S. sunflowerseed production is forecast 16 percent lower to 2.45 billion pounds as yields retreat from last year’s record. Season-ending stocks in 2015/16 of all sunflowerseed types are forecast to be at their highest level since 2009/10, at 357 million pounds.
The excess carryover stocks will discourage non-oil type production in 2016/17, which is forecast declining 33 percent from 2015/16. Also, oil-type sunflowerseed production is forecast down 12 percent from the previous year.
However, the decline in all-type sunflowerseed production in 2016/17 may exceed the higher carryover, so total supplies may decline from 3.29 billion in 2015/16 to 2.98 billion pounds. Higher expected crush demand for 2016/17 (up 11 percent to 1.3 billion pounds) is forecast to raise sunflowerseed oil production to 545 million pounds.
Robust Peanut Exports Seen With a Record Supply
From USDA’s Prospective Planting report, the intended planting for peanuts in 2016/17 is down 9 percent to 1.48 million acres. Beginning stocks of peanuts for 2016/17 are forecast at a record high of 2.956 billion pounds, which is 854 million pounds higher than the previous year’s beginning stocks.
This would more than offset an expected 456-million-pound reduction in the 2016/17 crop to 5.76 billion pounds.
Domestic food consumption is forecast up 3 percent for 2016/17 to 3.04 billion pounds. Continued low prices are expected to increase export demand for U.S. peanuts by 15 percent to a record 1.3 billion pounds. Despite record use, season-ending peanut stocks are forecast to stay near the 2015/16 level.
A Higher Supply of Cottonseed to Boost Demand
U.S. cottonseed production for 2016/17 is forecast up 23 percent to 4.98 million short tons. Supply is projected up 20 percent from last year to 5.37 million short tons. The expected increase in cottonseed production is mostly based on data from the Prospective Plantings report, where intended cotton area planted for 2016/17 is up 11 percent to 9.56 million acres.
As of May 8, 26 percent of cotton acres were planted–on par with the 5-year average. A prospective supply increase led USDA to raise its forecast domestic crush to 1.9 million short tons from 1.5 million in 2015/16. U.S. cottonseed exports in 2016/17 could also rebound to 250,000 short tons from 100,000 in 2015/16.