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Soybean Market Outlook in Mid-June 2016

June 24, 2016


Summary

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on June 10th, soybean futures prices have declined.  Since March 2, 2016 when CME JULY 2016 soybean futures prices closed at $8.67 ¾, prices have trended upward to a high of $12.08 ½ on the day of the release of the June 10th WASDE report – closing at $11.78 ¼ that same day.  Since then, CME JULY 2016 soybeans declined to $10.99 ¼ on Friday, June 24th before closing at $11.03 /bu that same day. 

Since 2014, World soybean market prices have been limited by an ongoing “large crop – low price” regime, caused by consecutive record World soybean production years for 2014 and 2015, with another record crop projected for 2016 in South America and the United States.  However, in March-early June 2016, significant soybean production problems have occurred in key South American production areas such in Argentina and parts of Brazil – along with a heightening of trade concerns about summer 2016 weather conditions in the U.S. Corn Belt.   These emerging World soybean production concerns have helped to strengthen U.S. soybean export trade in the “current crop” 2015/16 marketing year (ending August 31, 2016) and improved the outlook for U.S. soybean exports in “new crop” MY 2016 (starting September 1, 2016).

Longer term, from MY 2008/09 to projected “new crop” MY 2016/17, the USDA forecasts a strong upward trend in World soybean production (up 6.6% annually) which will have “out-paced” the increase in World soybean use (up 5.9% per year) if it holds true.  However, the shortfall in South American’s soybean production in “current” MY 2015/16 has at least temporarily interrupted these trends, and has caused projected World soybean ending stocks and percent ending stocks-to-use to fall since MY 2014/15.  As this trend toward larger supplies has “abated” in “current” MY 2015/16 and for projected “new crop” MY 2016/17, U.S. and World soybean prices have received at least moderate support.  These trends are illustrated in that since World soybean ending stocks of 62.0 mmt (22.5% %S/U) in MY 2013/14, stocks grew sharply in MY 2014/15 to 78.3 mmt (25.9% S/U), but have since declined to an estimate of 72.3 mmt (22.7% S/U) in “current” MY 2015/16, and are forecast to decline further to 66.3 mmt (20.2% S/U) in “new crop” MY 2016/17. 

A key World soybean market issue will be to determine whether weather or disease problems end up driving U.S. soybean production low enough to alter the existing “large supply – buyer’s market” situation that has existed in U.S. and World soybean markets in recent years, or if a large 2016 U.S. soybean crop will “rectify” this short run trend toward lower World soybean ending stocks and lead to a re-establishment of the “large supply – low price” situation in fall 2016 that had existed during the 2014-2015 time period.

USDA U.S. Soybean Forecast of “Current” MY 2015/16: As usual at this time in the marketing year, the USDA maintained its forecast 2015 U.S. soybean production of a record 3.929 billion bushels (bb) – up marginally from 3.927 bb in 2014.  For “current” 2015/16, USDA projected U.S. total supplies at a record 4.150 bb (vs 4.052 bb in MY 2014/15), domestic crush at 1.890 bb (up 10 mb from May and 20 mb from April), exports at 1.760 bb (up 20 mb from May and 70 mb from March – but still down from the existing record 1.843 bb in “current” MY 2014/15), total use at 3.780 bb (up 30 mb from May – but less than the record of 3.862 bb in MY 2014/15), and ending stocks at a 9-year high of 370 mb (down 30 mb from May, and 75 mb from April, but still up from 191 million bushels or ‘mb’ in MY 2014/15, and from 92 mb in MY 2013/14).   Ending stocks-to-use are projected at 9.79% - down from 10.67% in May and 12.01% in April, but still up dramatically from 4.95% in MY 2014/15, and the record low of 2.65% in MY 2013/14.  The USDA forecast “current” MY 2015/16 U.S. soybean average prices to be $9.05 /bu – up $0.15 from May, but still down from $10.10 in MY 2014/15, $13.00 in MY 2013/14, and the record high of $14.40 in MY 2012/13.    

USDA Forecast for “New Crop” MY 2016/17: The USDA projected 2016 U.S. soybean plantings of 82.236 million acres (ma) – down 414,000 acres from 2015.  Forecast 2016 harvested acres of 81.370 ma is calculated from projections of production and average yields, and is down 479,000 acres vs 2015.  With projected yields of 46.7 bu/ac, 2016 U.S. soybean production is projected to be 3.800 bb – 3rd highest on record behind 3.927 bb in 2014 and 3.929 bb in 2015.   With forecast “new crop” MY 2016/17 total use of 3.940 bb (a new record high ahead of 3.862 bb in MY 2014/15), and projected ending stocks of 260 mb (6.60% S/U), U.S. soybean prices are estimated by the USDA to be in the range of $8.75-$10.25 (midpoint = $9.50 /bu) – down from the $9.05 /bu in “current” MY 2015/16 and $10.10 in MY 2014/15.  This USDA projection is thought to have a 35% probability of occurring in the judgment of Kansas State University Extension.

KSU Forecasts for “New Crop” MY 2016/17:  Three alternative KSU-Scenarios for U.S. soybean supply-demand and prices are presented for “new crop” MY 2016/17, with each assuming a 1.000 ma upward adjustment in 2016 U.S. soybean planted acres from the USDA’s March 31st Prospective Plantings and the June 10th WASDE reports.  A) KSU “Higher Acres - Trend Yield” Scenario (30% probability) assumes for “new crop” MY 2016/17: 83.236 ma planted, 82.242 ma harvested, 45.85 bu/ac trend yield, 3.771 bb production, 4.171 bb total supplies, 3.915 bb total use, 256 mb ending stocks, 6.54% S/U, & $10.25 /bu U.S. soybean average price;  B) KSU “Higher Acres - Moderate Drought” (20% prob.) assumes 83.236 ma planted, 82.242 ma harvested, 44.0 bu/ac yield, 3.619 bb production, 4.019 bb total supplies, 3.801 bb total use, 218 mb ending stocks, 5.74% S/U, & $10.75 /bu U.S. soybean price; and C) KSU “Higher Acres & Serious Drought” (15% prob.) assumes 83.236 ma planted, 82.242 ma harvested, 39.0 bu/ac yield, 3.207 bb production, 3.607 bb total supplies, 3.436 bb total use, 171 mb ending stocks, 4.98% S/U, & $11.50 /bu U.S. soybean price.


I. U.S. Soybean Market Situation and Outlook

I-A. June 10th USDA WASDE & the June 30th USDA Acreage Reports

On June 10th the USDA World Agricultural Outlook Board (WAOB) released its June 2016 World Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World soybean supply-demand and price projections for the 2014/15, “current” 2015/16, and “new crop” 2016/17 marketing years.  The “current” 2015/16 marketing year for U.S. soybeans began on 9/1/2015 and will last through 8/31/2016, with “new crop” MY 2016/17 beginning 9/1/2016 and lasting through 8/31/2017. 

Prior to the April 12th, May 10th, and June 10th USDA WASDE reports, on March 31st the USDA National Agricultural Statistics Service (NASS) released its 2016 Prospective Plantings and March 1st Quarterly Grain Stocks reports.  Information from the 2016 Prospective Plantings report has been used by the USDA as the base estimate for the USDA’s 2016 U.S. soybean planted acreage forecast in the June 10th WASDE report.

However, more current farmer survey-based information on 2016 planted and harvested acreage for U.S. soybeans and other major and minor crops will be made available by USDA NASS in its’ June 30th 2016 Acreage report.  The findings of the USDA 2016 Acreage report will provide information from surveys of nearly 70,000 U.S. farm operators that were conducted the first two weeks in June 2016, supplemented with historical planted-to-harvested acreage relationships and the historic accuracy of past USDA Acreage report projections. 

I-B. CME JULY & NOV 2016 Soybean Futures Trends & Kansas Cash Prices

Since lows of $8.59 ½ on November 23, 2015, $8.63 on January 4, 2016, and $8.62 on February 29, 2016, JULY 2016 Chicago Mercantile Exchange (CME) soybean futures prices have traded higher – up to $12.08 ½ on June 6th before closing at $11.03 on Friday, June 24th (Figure 1).

Similarly, since lows of $8.50 on September 8, 2015, $8.59 ¼ on November 9, 2015, $8.68 on January 4, 2016, and $8.68 on February 29, 2016, NOVEMBER 2016 CME soybean futures prices have traded up to $11.86 ¼ on June 13th, before closing at $10.78 ½ on Friday, June 24th (Figure 1).

Figure 1. JULY and NOVEMBER 2016 CME Soybean Futures Weekly Price Charts


 

I-B. Kansas Soybean Seasonal Average Price Trends

Seasonal average price index trends for Kansas soybeans over the last 15 years indicate definite seasonal price trends (Figures 2a and 2b).  Since MY 1999/00 Kansas soybean prices have typically been weakest during the harvest month of October, with an average seasonal price index of 91.4% of the unweighted average Kansas soybean price for the September 1st through August 31st marketing year period.  Kansas cash soybean prices have tended to trend higher from harvest lows beginning in November. 

On average this uptrend in Kansas soybean prices has steadily continued through spring and mid-summer of the following year – up to highs during the following July of 108.1% of the marketing year average price.  The most variability around these monthly indices has occurred at as harvest approached and occurred at the beginning of the marketing year (September-October), during late spring in March-April, and during the key U.S. soybean crop development month of August – just prior to the start of the new crop marketing year on September 1st of each year.     

Season Average Prices for “Current Crop” MY 2015/16

In “current crop” MY 2015/16 U.S. soybean prices are moving in an unusual price pattern – declining in February below prices that occurred during the September-January “harvest-to-winter post-harvest” period rather than following a more normal historical seasonal post-harvest sideways-to-upward trend after October lows.  The USDA estimates that U.S. soybean cash prices will increase during the March through August 2016 period – i.e., through the end of the “current” 2015/16 marketing year.

Based on market information available through June 10th, the USDA’s futures-based price model (http://www.ers.usda.gov/data-products/season-average-price-forecasts.aspx) projects for “current” MY 2015/16 that the U.S. soybean season average price will be $9.14 per bushel – up marginally from the June 10th USDA WASDE price projection of $9.05.  These seasonal price patterns are calculated as a percent of the USDA’s futures based price model season average price for “current” MY 2015/16 of $9.14 per bushel rather than the June 10th WASDE mid-point price projection of $9.05 for U.S. soybeans. 

Figure 2a. Kansas Soybean Seasonal Price Index – Last 15 Marketing Years: MY 1999/00 – MY 2014/15 plus “Current Crop” MY 2015/16 Estimate (Source: KSU www.AgManager.info)

 

 

Season Average Prices for “New Crop” MY 2016/17

In the “new crop” 2016/17 marketing year for U.S. soybeans, price movements are also projected to trend contrary to normal historic seasonal price patterns (Figure 2b).  In “new crop” MY 2016/17 – beginning September 1, 2016 – U.S. corn prices are forecast to increase moderately from September 2016 into harvest November and then to trend sideways into December.  From there prices are projected to move sideways-to lower through August 2017 – the end of the “new crop” 2016/17 marketing year.  This projected pattern for “new crop” MY 2016/17 is counter to the historic seasonal trend in Kansas in which harvest lows in October are following by consistent monthly increases through July of the following year.

The June 10th USDA’s futures-based price model projects for “new crop” MY 2016/17 that the final U.S. soybean season average price will be $10.87 per bushel – which is up from the June 10th USDA WASDE midpoint projection of $9.50 and also outside of the top end of the forecast range of $8.75-$10.25 per bushel.  These seasonal price patterns are calculated as a percent of the USDA’s futures based price model season average price for “new crop” MY 2016/17 of $10.87 per bushel rather than the June 10th WASDE report mid-point price projection of $9.50 for U.S. soybeans. 

Figure 2b. Kansas Soybean Seasonal Price Index – Last 15 Marketing Years: MY 1999/00 – MY 2014/15 plus “New Crop” MY 2016/17 Estimate (Source: KSU www.AgManager.info)


 

I-C. U.S. Trade Weighted Dollar Index

Increases in the value of the U.S. dollar relative to the currencies of U.S. trading partner countries began in earnest in August 2014 when the dollar index was valued at 77.2692 on August 15th.  This upward trend continued through January 2016 with the index climbing to a high of 95.8011 on January 20th - up 24.0% from mid-August 2014 (Figure 3).  Since then the index has declined, falling to a low of 87.7060 on May 2, 2016, before trending moderately higher again. On June 10, 2016 the U.S. Dollar index was calculated to be 89.1975 – down 6.9% from the January 20th high of 95.8011 but still up 15.4% from 77.2692 in mid-August 2014. 

The upward trend in the value of the U.S. trade weighted dollar index since mid-2014 has been significant negative factor in U.S. grain export markets.  A higher U.S. dollar exchange rate relative to other major currencies generally makes it more expensive for foreign buyers of U.S. grains to exchange their country’s currencies for U.S. dollars – which they would then in turn use to purchase U.S. grain exports (i.e., which are denominated or “priced” in U.S. dollars in U.S. grain markets). 

A relatively high value for the U.S. dollar works against U.S. soybeans being an affordable, competitive alternative export seller in World grain trade.   That said, the lack of alternative suppliers of soybeans for export markets outside of the United States, Brazil, Argentina, Paraguay, and other smaller South American countries makes the high value of the U.S. dollar less of an inhibiting factor for U.S. soybean exports than for U.S. wheat (for which a number of alternative major exporters exists).

Figure 3. Daily U.S. Trade Weighted Dollar Index – Major Currencies (DTWEXM)                     
(Source: St. Louis Federal Reserve Bank, FRED)


 

I-D. Comments on Major World Soybean Market Trends

Soybean Market Trend Outlook for 2016-2017

The current market consensus represented in USDA projections for “new crop” MY 2016/17 are that a) Chinese soybean imports will continue to be strong and growing annually, b) the 2017 South American soybean production harvested in early-mid 2017 will be the largest on record , c) U.S. soybean production prospects in 2016 under normal crop conditions are expected to only moderately less (3.800 billion bushels or ‘bb’) than the record U.S. crop highs in 2014 (3.927 bb) and 2015 (3.929 bb), and d) export demand for soybeans and soybean products will remained strong – helped by strong Chinese demand, moderate-to-low World soybean prices, and low ocean freight rates.  

At this time there is no indication any change is expected in these projected trends in production, exports, imports or ending stocks in the broader World soybean market, although production problems are possible in the United States during summer-fall 2016 period.  Until and/or unless such potential 2016 U.S. soybean production problems actually do occur, the World soybean market will likely assume that these dominating “adequate supply trends” will continue into the foreseeable future – with soybean prices remaining relatively moderate-to-low levels compared to market highs since MY 2007/08.

The activities of the World soybean market over the last 3-to-5 years can be better understood by recognizing several of these “predominant trends” that have been occurring in production and export/import trade among major countries and regions of the World involved in soybean trade.  The primary countries involved in or “driving” these predominant trends have been China in terms of demand factors, and South American countries (Brazil, Argentina, Paraguay, and others) and the United States in regards to supply-oriented factors.

The Necessity to the Soybean Market of Continued Strength in Chinese Imports

It is widely acknowledged by soybean market analysts that continued growth and/or at least “level sustainability” of Chinese soybean imports at current and projected levels is necessary for continuance of the historically high World soybean market prices that have occurred since the 2012/13 marketing year.  The USDA has continued to project that strong growth would occur in Chinese soybean imports in “current” MY 2015/16 and in “new crop” MY 2016/17.  If recent strength in Chinese soybean import demand were to falter or “moderate”, it would have a substantial negative impact on U.S. and World soybean market prices. 

China Soybean Supply-Demand

Growing Chinese domestic use and imports of soybeans have been the key market demand “driver in World soybean markets in recent years.   Figure 4 illustrates trends since the 2006/07 marketing year in Chinese soybean production, domestic use, imports, and ending stocks. 

Figure 4. China Soybean Supply-Demand Trends: MY 2006/07 – “New Crop” MY 2016/17.   Sources: June 10, 2016 USDA WASDE Report & USDA Foreign Agricultural Service PSD Online

 

China Soybean Domestic Production: Chinese domestic production of soybeans was 13.05 mmt in MY 2012/13 (17.1% of total domestic use), 11.95 mmt in MY 2013/14 (14.8% domestic usage), 12.15 mmt in MY 2014/15 (13.9% domestic use), an estimate of 11.6 mmt in “current” MY 2015/16 (12.2% domestic use), and a projection of 12.2 mmt (12.1% domestic use) in “new crop” MY 2016/17 (Figure 4).  Chinese soybean domestic production is forecast to be down an average of 0.213 mmt annually or minus 1.6% per year since MY 2012/13.  With China’s domestic soybean production declining marginally as a proportion of total domestic use since MY 2008/09, China has been forced over this time period to rely even more heavily on sizable amounts of soybean imports to fill domestic use needs.  

China Soybean Domestic Use: Chinese soybean domestic usage has increased from 76.1 million metric tons (mmt) in MY 2012/13 (29.0% of World use), up to 80.6 mmt in MY 2013/14 (29.2% World use), to 87.2 mmt in MY 2014/15 (29.0% World use), an estimate of 95.25 mmt (29.95% World use) in “current” MY 2015/16, and a projection of 100.8 mmt (a record high 30.7% of World use) in “new crop” MY 2016/17 (Figure 4).  Chinese soybean domestic usage is projected to be up an average of 6.155 mmt annually or 8.1% per year since MY 2012/13. 

China Soybean Imports: Chinese soybean imports were estimated to be 59.9 mmt (61.6% of World soybean imports) in MY 2012/13, 70.4 mmt (62.3% World imports) in MY 2013/14, 78.35 mmt (63.4% World imports) in MY 2014/15, an estimate of 83.0 mmt (63.5% World imports) in “current” MY 2015/16, and a projection of 87.0 mmt (64.0% World imports) in “new crop” MY 2016/17 (Figure 4).  Chinese soybean imports are projected to be up an average of 6.784 mmt annually or 11.3% per year since MY 2012/13.   

China Soybean Ending Stocks: Chinese soybean ending stocks were estimated to be 12.4 mmt (22.3% of World soybean ending stocks) in MY 2012/13, 13.9 mmt (22.4% World stocks) in MY 2013/14, 17.0 mmt (21.75% World stocks) in MY 2014/15, an estimate of 16.2 mmt (22.5% World stocks) in “current” MY 2015/16, and 14.4 mmt (21.8% World stocks) in “new crop” MY 2016/17 (Figure 4).  Chinese soybean ending stocks are projected to be up an average of 0.527 mmt annually or 4.25% per year since MY 2012/13.   

China & Non-China Soybean Percent Ending Stocks-to-Use: In addition, Chinese soybean percent ending stocks-to-use were estimated to be 16.25% in MY 2012/13, 17.2% in MY 2013/14, 19.5% in MY 2014/15, 17.0% in “current” MY 2015/16, and a projection of 14.4% in “new crop” MY 2016/17 (Figure 4).  Since MY 2012/13, soybean percent ending stocks-to-use for all other countries (i.e., “non-Chinese”) is estimated to have been 23.1% in MY 2012/13, 24.6% in MY 2013/14, 28.7% in MY 2014/15, an estimate of 25.2% in “current” MY 2015/16, and a projection of 22.8% in “new crop” MY 2016/17. 

South America Soybean Supply-Demand

Soybean Production in South American Countries: Since 2012 South American soybean production has trended higher (Figure 5).  The top 3 countries for soybean production in South America are Brazil, Argentina, and Paraguay.  Over the MY 2012/13 – “new crop” MY 2016/17 period these three countries are projected to have combined on average annually to produce 96.2% of the South American soybean crop.   

South American total soybean production has grown from 115.9 mmt in the short crop year of year 2012 (i.e., MY 2011/12), to 146.0 mmt in 2013, 154.2 mmt in 2014, 172.9 mmt in 2015, an estimate of 167.6 mmt in 2016 (i.e., “current” MY 2015/16), with a projection of 175.3 mmt in 2017 (i.e., in “new crop” MY 2016/17).  Soybean production in South America amounted to 48.2% of World production in the 2011/12 marketing year, 54.4% in MY 2012/13, 54.6% in MY 2013/14, and 54.1% in MY 2014/15, an estimate of 53.5% in “current” MY 2015/16, and a projection of 54.2% in “new crop” MY 2016/17. 

South America Soybean Exports: South American soybean exports have grown at a rate of 12.2% annually since the 2008/09 marketing year – projected to have increased 4.8 mmt annually over this same eight-year period (Figure 5).  Just as for soybean production, the top 3 countries for soybean exports in South America are Brazil, Argentina, and Paraguay, which are projected to combine to export 95.4% of South American soybean exports over the MY 2012/13 – “new crop” MY 2016/17 period. 

Since MY 2012/13, South American soybean exports have totaled 59.2 mmt in MY 2012/13, followed by 62.8 mmt in MY 2013/14, 68.7 mmt in MY 2014/15, an estimate of 76.65 mmt in “current” MY 2015/16, and a projection of 78.0 mmt in “new crop” MY 2016/17.  Total soybean exports from South American countries as a proportion of World exports has amounted to 58.75% in MY 2012/13, 55.7% in MY 2013/14, 54.5% in MY 2014/15, an estimate of 58.1% in “current” MY 2015/16, and a projection of 56.7% in “new crop” MY 2016/17.   

Figure 5. South America Soybean Supply-Demand Trends: MY 2006/07 – “New Crop” MY 2016/17. Sources: June 10, 2016 USDA WASDE Report & USDA FAS PSD Online


South America Soybean Ending Stocks:  Soybean ending stocks in South America as a whole reached a record high level in MY 2014/15, but declined from that record high in the two most recent marketing years (Figure 5).  After growing to the previous record of 45.9 mmt in the 2010/11 marketing year, South American soybean ending stocks dropped to 28.7 mmt in MY 2011/12, then began rebuilding to 35.3 mmt in MY 2012/13, 41.7 mmt in MY 2013/14, and a record high of 51.8 mmt in MY 2014/15, followed by an estimate of 42.7 mmt in “current” MY 2015/16, and a projection of 40.9 mmt in “new crop” MY 2016/17. 

Soybean ending stocks in South American countries amounted to 63.7% of World stocks in MY 2012/13, 67.3% in MY 2013/14, 66.2% in MY 2014/15, an estimate of 59.1% in “current” MY 2015/16, and a projection of 61.75% of World soybean ending stocks in “new crop” MY 2016/17. 

United States’ Soybean Production, Exports & Ending Stocks

U.S. Soybean Production: From drought-affected 2012 low levels, United States’ soybean production increased sharply in 2013 and then again to a record high in 2014, and then grew marginally higher again to a new record level in 2015, but are projected preliminarily to move moderately lower in 2016 (Figure 6).  In year 2012, the U.S. produced 82.8 mmt of U.S. soybean production (30.8% of World production), followed by 91.4 mmt (32.35% World crop) in MY 2013/14, 106.9 mmt (33.4% World crop) in MY 2014/15, an estimated level of 106.93 mmt (34.1% World crop) in “current” MY 2015/16, and a projection of 103.4 mmt (31.95% World crop) in “new crop” MY 2016/17.   Projected U.S. soybean production for 2016 from the USDA of 3.800 billion bushels (bb) or 103.419 mmt would be the third highest on record following years 2014 (3.927 bb) and 2015 (3.929 bb).

U.S. Soybean Exports: United States’ soybean exports have grown from 36.1 mmt (1.317 bb – 35.8% of World exports) in MY 2012/13, to 44.6 mmt (1.638 bb – 39.55% World exports) in MY 2013/14, to 50.2 mmt (1.843 bb – 39.8% World exports) in MY 2014/15, an estimate of 47.9 mmt (1.760 bb – 36.3% World exports) in “current” MY 2015/16, and a projection of 51.7 mmt (1.900 bb – 37.55% World exports) in “new crop” MY 2016/17 (Figure 6).  Projected U.S. soybean exports for “new crop” MY 2016/17 1.900 bb would be the highest on record – ahead of 1.843 bb in MY 2014/15.

Figure 6. United States’ Soybean Supply-Demand Trends: MY 2006/07 – “New Crop” MY 2016/17.  Sources: June 10, 2016 USDA WASDE Report & USDA FAS PSD Online


 

U.S. Soybean Ending Stocks: United States’ soybean ending stocks have changed from 3.825 mmt (141 million bushels or ‘mb’) in MY 2012/13 (6.9% of World stocks), to a record low of 2.504 mmt (92 mb – 4.0% World stocks) in MY 2013/14, to 5.188 mmt (191 mb – 6.6% World stocks) in MY 2014/15, with an estimate of 10.070 mmt (370 mb – 13.9% World stocks) in “current” MY 2015/16, and a projection of 7.063 mmt (260 mb – 10.65% World stocks) in “new crop” MY 2016/17 (Figure 6).  Projected U.S. soybean ending stocks for “new crop” MY 2016/17 of 260 mb or 7.1 mmt would be 282% larger than the record low “short supply” amount of 92 mb in MY 2013/14.

Clearly one of the key negative factors affecting U.S. soybean market prices is the major increase in U.S. soybean ending stocks – to the degree that a “buyer’s market” exists in which there is at this time a very limited motivation for potential buyers to feel compelled to bid soybean prices sharply higher in an effort to secure soybean supplies for usage.

I-E. U.S. Soybean Supply-Demand

Table 1 shows the USDA U.S. soybean supply-demand balance sheet for the MY 2007/08 through “new crop” MY 2016/17 period, with adjusted projections by the USDA and Kansas State University for “new crop” MY 2016/17. 

United States’ soybean harvested and planted acreage for the year 2000 through projected 2016 period are shown in Figure 7, with U.S. soybean yields for 1973 through 2016 are shown in Figure 8.  U.S. soybean total supplies for the 2004/05 through projected 2016/17 marketing years are shown in Figure 9.   Table 1 and Figures 7-9 show the growth in U.S. soybean production and total supplies since the smaller crop years of 2011 and 2012, and the expectation by the USDA of a continuation of large crops ( 3.800 to 3.925 billion bushels or ‘bb’ or more) and sizable U.S. soybean supplies in “new crop” MY 2016/17.

U.S. Soybean Planted & Harvested Acreage

In the March 31st Prospective Plantings report and the June 10th WASDE report that followed, the USDA projected for year 2016 that there will be marginally lower U.S. soybean planted acres at 82.236 million acres or ‘ma’, compared to 82.650 ma in 2015 and the record high of 83.276 ma in 2014 (Table 1 and Figure 7).  The USDA projected that 2016 U.S. soybean harvested acres will be approximately 81.370 ma – down from 81.849 ma in 2015 and the record of 82.591 ma in 2014 (Table 1 and Figure 7). 

KSU projections for 2016 U.S. soybean planted and harvested acres are higher than those of the USDA at this time, with planted acres at 83.236 ma (up 1.000 ma vs USDA), and harvested acres at 82.242 ma (up approximately 0.872 ma vs USDA).  More favorable new crop prices for soybeans relative to corn, and wet planting conditions in parts of the eastern and western U.S. Corn Belt are key factors that may make such an upward adjustment in U.S. soybean planted and harvested acreage likely to occur. 

U.S. Soybean Yields

The USDA projected U.S. soybean yields in 2016 to average 46.7 bu/ac which would be the 3rd highest on record, down from the record high of 48.0 bu/ac in 2015 and the 2nd highest on record of 47.5 bu/ac in 2014 (Table 1 and Figure 8).  This USDA scenario is judged to have a 35% probability of occurring by KSU. 

Among KSU Yield Scenario projections, the KSU “Higher Acres – Trend Yield” Scenario projection – given a 30% probability of occurring - is for 2016 U.S. soybean average yield to equal the 1973-2015 trendline projection of 45.85 bu/ac – 0.85 bu/ac less than the USDA’s projection of 46.7 bu/ac.  A KSU “Higher Acres – Moderate Drought” Scenario (20% probability) projects a yield of 44 bu/ac in 2016.  In addition, a KSU “Higher Acres – Trend Yield” Scenario (15% probability) projects a yield of 39.0 bu/ac in 2016.

Table 1. U.S. Soybean Supply-Demand Balance Sheet: MY 2009/10 through “New Crop” MY 2016/17.  As of June 10th USDA NASS Crop Production and WASDE reports, & KSU “New Crop” MY 2016/17 Supply-Demand Projections

Item

2009/10

2010/11

2011/12

2012/13

 

2013/14

2014/15

2015/16

USDA

2016/17

KSU-A

Higher Acres

Trend Yield

2016/17

KSU-B

Higher Acres

“Moderate

Drought Stress”

2016/17

KSU-C

Higher Acres

“Serious Drought Stress”

2016/17

Percent Probability

 

 

 

 

 

 

 

35%

30%

20%

15%

Planted Area (million acres)

77.451

77.404

75.046

77.198

76.840

83.276

83.650

82.236

83.236

83.236

83.236

Harvested Area (million acres)

76.372

76.610

73.776

76.144

76.253

82.591

81.814

*81.730

82.242

82.242

82.242

% Harvested-to-Planted acres

98.6%

99.0%

98.3%

98.6%

99.2%

99.2 %

99.0%

98.9%

98.8%

98.8%

98.8%

Yield per harvested acre (bu/ac)

44.0

43.5

42.0

40.0

44.0

47.5

48.0

 46.7

 45.85

44.0

39.0

 

Million Bushels

Beginning Stocks

138

151

215

169

141

92

191

370

370

370

370

Production

3,361

3,331

3,097

3,042

3,358

3,927

3,929

3,800

3,771

3,619

3,207

Imports

15

14

16

41

72

33

30

30

30

30

30

Total Supply

3,514

3,497

3,328

3,252

3,570

4,052

4,150

4,200

4,171

4,019

3,607

 

 

Domestic Crushings

1,752

1,648

1,703

1,689

1,734

1,873

 1,890

1,915

1,902

1,850

1,680

Exports

1,499

1,505

1,365

1,317

1,638

1,843

1,760

1,900

1,887

1,825

1,630

Seed

90

87

90

89

97

96

95

95

96

96

96

Residual

22

42

1

16

10

49

34

30

30

30

30

Total Use

3,363

3,282

3,159

3,111

3,478

3,862

3,780

3,940

3,915

3,801

3,436

 

 

Ending Stocks

151

215

169

141

92

191

370

260

256

218

171

% Ending Stocks-to-Total Use

4.49%

6.55%

5.36%

4.53%

2.65%

4.95%

9.79%

6.60%

6.54%

5.74%

4.98%

U.S. Average Farm Price ($/bu)

$9.59

 

$11.30

$12.50

$14.40

$13.00

$10.10

$9.05

$8.75-$10.25

($9.50)

$10.25

 

$10.75

 

$11.50

 

Figure 7. U.S. Soybean Planted & Harvested Acreage: 2004-2016.  As of June 10th USDA NASS Crop Production and WASDE reports & KSU 2016 KSU Acreage Projection


Figure 8. U.S. Soybean Yields: 1973-2016, As of June 10th USDA NASS Crop Production and WASDE reports, & KSU Trend-Line Yield projection


 

2016 U.S. Soybean Production Forecast

The USDA projected that 2016 U.S. soybean production would be 3.800 billion bushels (bb), based on these USDA’s 2016 planted acreage and yield forecasts, with this scenario given a 35% probability of occurring by KSU estimates. United States’ 2016 U.S. soybean production of 3.800 bb would be down from the record high of 3.929 bb in 2015, and the near record of 3.927 bb in 2014, but above the range of 3.097 to 3.361 bb for the MY 2009/10 through MY 2013/14 time-period (Table 1 and Figure 9). 

KSU 2016 U.S. Soybean Production Forecasts

With a combination of higher soybean acreage but lower yields, there are three alternative probability-weighted KSU U.S. soybean production scenarios for 2016 (Table 1).  These three scenarios each assume 1.0 ma more 2016 planted acres than the USDA at 82.236 ma, with 2016 harvested acres at 82.242 ma, based on percent harvested-to-planted acres of 98.8% (i.e., the U.S. average for the 2004-2015 period) (Table 1 and Figure 7).

For the KSU “Higher Acres – Trend Yield” Scenario (30% probability), with higher 2016 planted acreage of 83.236 ma, higher harvested acres of 82.242 ma, and lower trendline yields of 45.85 bu/ac in 2016, U.S. 2016 soybean production would equal 3.771 bb – down moderately from the USDA 2016 projection of 3.800 bb (Table 1).  It is assumed that there is a 30% likelihood of this KSU scenario outcome occurring, compared to a 35% likelihood of the adjusted 2016 USDA projection of 3.800 bb. 

For the KSU “Higher Acres – Moderate Drought” Scenario (20% probability), if a period of moderate crop stress were to occur in the U.S. in 2016, with higher 2016 planted acreage of 83.236 ma, higher harvested acres of 82.242 ma, and lower yields of 44.0 bu/ac in 2016, then U.S. 2016 soybean production would equal 3.619 bb – down 181 mb the USDA 2016 projection of 3.800 bb (Table 1).  It is assumed that there is a 20% likelihood of this scenario occurring. 

For the KSU “Higher Acres – Severe Drought” Scenario (15% probability), if a severe drought were to occur in the U.S. in 2016, with higher 2016 planted acreage of 83.236 ma, higher harvested acres of 82.242 ma, and sharply lower yields of 39.0 bu/ac in 2016, then U.S. 2016 soybean production would equal 3.207 bb – down 593 mb from the USDA 2016 projection of 3.800 bb (Table 1).  It is assumed that there is a 15% likelihood of this scenario occurring. 

Figure 9. U.S. Soybean Total Production and Supplies: MY 2004/05 through “New Crop” MY 2016/17.  
As of June 10th USDA NASS Crop Production and WASDE reports

 

U.S. Soybean Use by Category & Total Use

Domestic Crush: The USDA projected in it’s June 10th WASDE report that U.S. soybean domestic crush in the “new crop” 2016/17 marketing year will be a record high 1.915 bb, up from the previous record high of 1.890 bb in “current” MY 2015/16 (up 10 mb from the May WASDE report), and from previous record of 1.873 bb in MY 2014/15 (Table 1 and Figure 10).  The USDA supply-demand scenario is given a 35% probability of occurring by KSU estimates.

KSU projections of U.S. soybean domestic crush in “new crop” MY 2016/17 for the KSU “Higher Acres – Trend Yield” Scenario (30% probability) is 1.902 bb – down 13 mb from the USDA’s projection.  In the KSU “Higher Acres – Moderate Drought” Scenario (20% probability), U.S. soybean domestic crush is projected to be 1.850 bb, while in the KSU “Higher Acres – Severe Drought” Scenario (15% probability), U.S. soybean domestic crush is forecast to be 1.680 bb, with projected domestic crush in both drought stress scenarios being adjusted lower due to the reduction in available supplies and related increases in U.S. soybean prices.

Figure 10. U.S. Soybean Use & Ending Stocks: MY 2004/05 – “New Crop” MY 2016/17                          
As of June 10th USDA NASS Crop Production and WASDE reports


U.S. Soybean Exports: The USDA forecast that U.S. soybean exports in the “new crop” 2016/17 marketing year to be a record high at 1.900 bb (up 15 mb from the May WASDE report) – up from 1.760 in “current” MY 2015/16 (up 20 mb from May, 55 mb from April, and up 70 mb from the March WASDE report), and up from the existing record high of 1.843 bb in MY 2014/15 (Table 1 and Figure 10).   The USDA supply-demand scenario is given a 35% probability of occurring by KSU estimates.

The KSU projection of U.S. soybean exports in “new crop” MY 2016/17 for the KSU “Higher Acres – Trend Yield” Scenario (30% probability) is 1.887 bb – down 13 mb from the USDA’s projection.  In the KSU “Higher Acres – Moderate Drought” Scenario (20% probability), U.S. soybean exports are projected to be 1.825 bb, while in the KSU “Higher Acres – Severe Drought” Scenario (15% probability), U.S. soybean exports are forecast to be 1.630 bb, with projected exports in both drought stress scenarios being adjusted lower due to the reduction in available supplies and related increases in U.S. soybean prices.

Regarding the current pace of U.S. soybean export shipments and sales in “current” MY 2015/16, as of June 16th, with 41 of 52 weeks (78.8%) of the marketing year complete, 1.600 bb of U.S. soybeans had been shipped for export – equal to 90.9% of the USDA’s updated projection of 1.760 bb for “current” MY 2015/16 (Source: USDA Foreign Agricultural Service U.S. Weekly Export Sales report - http://apps.fas.usda.gov/export-sales/esrd1.html).  United States’ export shipments will need to average 14.6 mb per week through the remainder of the “current” 2015/16 marketing year to attain the USDA’s June 10th WASDE projection of 1.760 bb.  This compares to U.S. soybean export shipments of 4.6 mb and 10.5 mb which occurred during the weeks ending June 9th and June 16th, respectively. 

Also as of June 16th an additional 235 mb of U.S. soybeans had also been sold for future export sales in the “current” 2015/16 marketing year.  These future sales of U.S. soybeans are subject to the risk of cancellation later prior to actual shipment.  Adding together 1.600 bb in actual past shipments plus 235 mb in forward sales amounts to 1.835 bb, or 104.2% of the USDA’s 1.760 bb U.S. soybean export target for “current” MY 2015/16 in the June 10th USDA WASDE report, with 78.8% (41/52 weeks) of the marketing year completed.  

In normal marketing years beginning in the spring and lasting through the summer months, exports of U.S. soybeans need to run far ahead of the 52-week average pace due that the dramatic slowing of U.S. shipments that occurs when the South American soybean crop becomes fully available in quantity for export trade beginning in later March-May.  In “current” MY 2015/16 ending on August 31, 2016 it is positive for the U.S. soybean market that although U.S. export shipments have slowed considerably from earlier in the marketing year that there are forward purchases of great enough quantity to meet the USDA’s projection of 1.760 bb by the end of “current” 2015/16 marketing year. 

That said, reductions in the projected 2016 South American soybean harvest due to crop production problems in Brazil has helped to increase U.S. soybean export prospects for the remainder of the “current” 2015/16 marketing year (i.e., through August 31, 2016) and beyond.  

Seed Use: The USDA forecast that U.S. soybean seed use in the “new crop” 2016/17 marketing year will be 95 mb, up 1 mb from a projection of 95 mb in “current” MY 2015/16, and down 1 mb from 96 mb in MY 2014/15, and 97 mb in MY 2013/14 (Table 1 and Figure 10). 

Residual Use: The USDA forecast that U.S. soybean residual use in the “new crop” 2016/17 marketing year will be 30 mb, down from 34 mb in “current” MY 2015/16, and from 49 mb in MY 2014/15, but up from 10 mb in MY 2013/14, and 16 mb in MY 2012/13 (Table 1 and Figure 10).  

Total U.S. Soybean Use: The USDA forecast that U.S. soybean total use in the “new crop” 2016/17 marketing year to be the highest on record at 3.940 bb (up 15 mb from the May WASDE report) – up from projected total use of 3.780 bb in “current” MY 2015/16 (up 30 mb from May, up 75 mb from April, and up 90 mb from March), and greater than the current record high of 3.862 bb in MY 2014/15 (Table 1 and Figure 10).    

The KSU projection of U.S. soybean total use in “new crop” MY 2016/17 for the KSU “Higher Acres – Trend Yield” Scenario (30% probability) is 3.915 bb – down 35 mb from the USDA’s projection.  In the KSU “Higher Acres – Moderate Drought” Scenario (20% probability), U.S. soybean total use is projected to be 3.801 bb, while in the KSU “Higher Acres – Severe Drought” Scenario (15% probability), U.S. soybean total use is forecast to be 3.436 bb, with projected total use in both drought stress scenarios being adjusted lower due to the reduction in available supplies and related increases in U.S. soybean prices.

U.S. Soybean Ending Stocks, % Ending Stocks-to-Use, & Prices

U.S. Soybean Ending Stocks:  The USDA projected U.S. soybean ending stocks for “new crop” MY 2016/17 to be 260 mb (down 45 mb from May), being down from 370 mb forecast for “current” MY 2015/16 (down 30 from the May WASDE, down 75 mb from the April WASDE, and down 90 mb from the March WASDE report), but still up from the range of 92 – 215 mb over the MY 2009/10 through MY 2014/15 period (Table 1 and Figure 10).  According to KSU estimates this USDA scenario has a 35% probability of occurring.

The KSU projection of U.S. soybean ending stocks in “new crop” MY 2016/17 for the KSU “Higher Acres – Trend Yield” Scenario (30% probability) is 256 mb – down 4 mb from the USDA’s projection.  In the KSU “Higher Acres – Moderate Drought” Scenario (20% probability), U.S. soybean ending stocks are projected to be 218 mb, while in the KSU “Higher Acres – Severe Drought” Scenario (15% probability), U.S. soybean ending stocks are forecast to be 171 mb, with projected ending stocks in both drought stress scenarios being adjusted lower due to the reduction in available supplies and related increases in U.S. soybean prices.

Percent Ending Stocks-to-Use: The USDA projected that percent (%) ending stocks-to-use for U.S. soybeans in “new crop” MY 2016/17 will be 6.60% (down from 7.78% in May) – down from its projection of 9.79% in “current” MY 2015/16 (also down from 10.67% in May).  These USDA projections of 6.60% stocks-to-use for “new crop” MY 2016/17 and 9.79% stocks-to-use “current” MY 2015/16 are both up sharply from 4.95% in MY 2014/15, the record low of 2.65% for MY 2013/14, and the range of 4.49% to 6.55% during the MY 2009/10 through MY 2012/13 period of time (Table 1 and Figure 11).  According to KSU estimates this USDA scenario has a 35% probability of occurring.

The KSU projection of U.S. soybean percent ending stocks-to-use in “new crop” MY 2016/17 for the KSU “Higher Acres – Trend Yield” Scenario (30% probability) is 6.54% – down from the USDA’s projection of 6.60%.  In the KSU “Higher Acres – Moderate Drought” Scenario (20% probability), U.S. soybean percent ending stocks-to-use are projected to be 5.74%, while in the KSU “Higher Acres – Severe Drought” Scenario (15% probability), U.S. soybean percent ending stocks-to-use are forecast to be 4.98%, with projected ending stocks-to-use in both drought stress scenarios being adjusted lower due to the reduction in available supplies relative to total use in these KSU scenarios.

Season Average U.S. Soybean Prices:  The USDA forecast that U.S. average soybean prices will be in the range of $8.75 to $10.25 (midpoint = $9.50) per bushel in “new crop” NY 2016/17 (35% probabilityKSU) – raised from $8.35-$9.85 (midpoint = $9.10 /bu) in May 2016.  This USDA forecast midpoint of $9.50 /bu is up from $9.05 in “current” MY 2015/16 (up $0.40 from May, and up $0.50 from the April WASDE). 

The USDA range midpoint forecast of $9.50 for “new crop” MY 2016/17 and the estimate $9.05 /bu in “current” MY 2015/16 are both still down from $10.10 /bu in MY 2014/15, $13.00 in MY 2013/14, and the record high of $14.40 in MY 2012/13 (Table 1 and Figures 11 and 12).     

The KSU projection of the U.S. soybean season average cash price in “new crop” MY 2016/17 for the KSU “Higher Acres – Trend Yield” Scenario (30% probability) is $10.25 /bu – up from the USDA’s range midpoint projection of $9.50 /bu, but equal to the top end of the USDA forecast range of $8.75-$10.25 /bu.  In the KSU “Higher Acres – Moderate Drought” Scenario (20% probability), the U.S. soybean season average cash price is projected to be $10.75 /bu, while in the KSU “Higher Acres – Severe Drought” Scenario (15% probability), the U.S. soybean season average cash price is forecast to be $11.50 /bu.  KSU forecasts of U.S. soybean season average prices were raised as projected U.S. soybean percent ending stocks-to-use became “tighter” or “smaller” in these three KSU U.S. soybean supply-demand and market price scenarios.

Figure 11. U.S. Soybean Ending Stocks vs U.S. Avg. Cash Prices: MY 1973/74 – “New Crop” 2016/17   As of June 10th USDA NASS Crop Production & WASDE reports and KSU “New Crop” MY 2016/17 Forecasts


Figure 12. U.S. Soybean Price vs U.S. % Stocks-to-Use: MY 1973/74 through “New Crop” MY 2016/17.  As of June 10th USDA Crop Prodn & WASDE reports & KSU “New Crop” MY 2016/17 Forecasts


 

II. World Soybean Supply-Demand Trends

Based on USDA Foreign Agricultural Service (FAS) estimates from PSD Online as of June 23, 2016 (http://apps.fas.usda.gov/psdonline/psdQuery.aspx), and the USDA June 10th WASDE report, the USDA is forecasting that World soybean production of 323.7 million metric tons (mmt) is up 3.3% in the “new crop” 2016/17 marketing year from “current” MY 2015/16, and to be up 1.2% over MY 2014/15. 

World soybean total supplies in “new crop” MY 2016/17 of 396.0 mmt are projected to be up 1.1% from 391.6 mmt in “current” MY 2015/16, and up 3.7% from 381.8 mmt in MY 2014/15.  World soybean total use is also projected to increase by 3.1% in “new crop” MY 2016/17 over “current” MY 2015/16, and by 9.0% over MY 2014/15.

Figure 13. World Soybean Usage & Ending Stocks: MY 2007/08 thru “New Crop” MY 2016/17.  As of the June 10, 2016 WASDE Report, and USDA Foreign Ag Service PSD Online


 

II-A. World Soybean Production

Projected World soybean production of 323.7 mmt in “new crop” MY 2016/17 would be a record high, being up 3.3% from 313.3 mmt in “current” MY 2015/16, and up 1.2% from 319.7 in MY 2014/15, and the range of 212.0-268.6 mmt during the MY 2007/08-MY 2013/14 period (Table 2 and Figure 13).  Foreign (non-U.S.) soybean production is projected to be 220.3 mmt in “new crop” MY 2016/17, up 6.8% from 206.3 mmt in “current” MY 2015/16, and up 3.5% from 212.85 mmt in MY 2014/15. 

II-B. World Soybean Exports

Projected World soybean exports of 137.7 mmt in “new crop” MY 2016/17 would also be a record high, being up 4.3% from 132.0 mmt in “current” MY 2015/16, and up 9.2% from 126.15 in MY 2014/15, and the range of 77.2-112.7 mmt during the MY 2007/08-MY 2013/14 period (Table 3 and Figure 13).  Foreign (non-U.S.) soybean exports are projected to be 86.0 mmt in “new crop” MY 2016/17, up 2.2% from 84.1 mmt in “current” MY 2015/16, and up 13.2% from 76.0 mmt in MY 2014/15. 

II-C. World Soybean Imports

Projected World soybean imports of 136.0 mmt in “new crop” MY 2016/17 would also be a record high, being up 4.0% from 130.8 mmt in “current” MY 2015/16, and up 10.1% from 123.5 in MY 2014/15 (Table 4).  Foreign (non-U.S.) soybean imports are projected to be 135.2 mmt in “new crop” MY 2016/17, up 4.0% from 130.3 mmt in “current” MY 2015/16, and up 10.3% from 122.6 mmt in MY 2014/15. 

II-D. World Soybean Domestic Crush

Projected World soybean domestic crush of 288.4 mmt in “new crop” MY 2016/17 would also be a record high, being up 3.3% from 279.3 mmt in “current” MY 2015/16, and up 9.6% from 263.3 in MY 2014/15 (Table 5).  Foreign (non-U.S.) soybean domestic crush is projected to be 236.3 mmt in “new crop” MY 2016/17, up 3.7% from 227.9 mmt in “current” MY 2015/16, and up 11.3% from 212.3 mmt in MY 2014/15. 

II-E. World Soybean Food, Seed & Residual (FSR) Use

Projected World soybean food, seed and residual (FSR) use of 39.55 mmt in “new crop” MY 2016/17 would up 2.2% from 38.7 mmt in “current” MY 2015/16, and up 5.3% from 37.6 in MY 2014/15 (Table 6).  Foreign (non-U.S.) soybean FSR use is projected to be 36.1 mmt in “new crop” MY 2016/17, up 2.8% from 35.2 mmt in “current” MY 2015/16, and up 7.5% from 33.6 mmt in MY 2014/15. 

II-F. World Soybean Total Use

Projected World soybean total use of 328.0 mmt in “new crop” MY 2016/17 would be a record high, being up 3.1% from 318.0 mmt in “current” MY 2015/16, and up 9.0% from 300.8 in MY 2014/15, and the range of 222.3-276.1 mmt during the MY 2007/08-MY 2013/14 period (Table 7 and Figure 13).  Foreign (non-U.S.) soybean FSR use is projected to be 272.45 mmt in “new crop” MY 2016/17, up 3.6% from 263.05 mmt in “current” MY 2015/16, and up 10.8% from 245.9 mmt in MY 2014/15. 

II-G. World Soybean Ending Stocks by Country / Region

Projected World soybean ending stocks of 68.3 mmt in “new crop” MY 2016/17 would be down 8.3% from 72.29 mmt in “current” MY 2015/16, and down 15.3% from 78.3 mmt in MY 2014/15, but is still above the range of 43.0-70.2 mmt during the MY 2007/08-MY 2013/14 period (Table 8 and Figure 13).  Foreign (non-U.S.) soybean ending stocks are projected to be 59.2 mmt in “new crop” MY 2016/17, down 4.8% from 62.2 mmt in “current” MY 2015/16, and down 19.0% from 73.1 mmt in MY 2014/15. 

II-H. World Soybean % Ending Stocks-to-Use by Country / Region

Forecast World soybean percent ending stocks-to-use of 20.2% in “new crop” MY 2016/17 is down from 22.7% in “current” MY 2015/16, from 26.0% in MY 2014/15, and is within the range of 19.4% to 27.8% during the MY 2007/08-2013/14 period (Table 9 and Figure 14).  The minimum levels of World soybean % ending stocks-to-use since the early-1960s occurred in MY 1976/77 (6.9% S/U), MY 1996/97 (11.8% S/U), and MY 1978/79 (12.6% S/U).  World soybean ending stocks-to-use of 19.4% in MY 2008/09 was the lowest since 19.3% in MY 2001/02.  Foreign (non-U.S.) soybean ending stocks-to-use are projected to be 16.5% in “new crop” MY 2016/17, down from 17.9% in “current” MY 2015/16, and down from 26.0% in MY 2014/15.

II-H. Relationship Between World % Ending Stocks-to-Use & U.S. Prices

Similar to the relationship between U.S. soybean ending stocks-to-use and U.S. average soybean prices (see Figure 12), since MY 1973/74 a negative relationship has existed between U.S. soybean season average cash prices and World soybean % ending stocks-to-use (Figure 14).  However, there appear to be two separate supply-demand relationship regimes represented in this graphic over time with a “lower price regime” that occurred during the MY 1973/74 – 2005/06 period, and a “higher price regime” occurring starting in MY 2006/07 and continuing through the present time.  The later period (since MY 2006/07) coincides with the sharp growth in Chinese soybean import demand in World soybean markets.  

Since MY 2006/07 in particular, larger World soybean supply-demand balances relative to use (i.e., higher percent ending stocks-to-use) are typically associated with lower U.S. and World soybean prices.  Conversely smaller supply-demand balances are usually associated with higher soybean prices – all else being equal.  As in Figure 12 earlier, U.S. soybean prices in Figure 14 are reported on a nominal basis (i.e., not inflation-adjusted).  

Since MY 2006/07, the minimum World soybean percent stocks-to-use was 19.4% in the historic tight stocks year of MY 2008/09.  “New crop” projections have been declining recently, with World soybean percent stocks-to-use to be 20.2% in “new crop” MY 2016/17 (i.e., approaching the 19.4% historic low in MY 2008/09). 

Figure 14. U.S. Soybean Price vs World % Stocks-to-Use: MY 1973/74 through “New Crop” MY 2016/17.  As of the June 10, 2016 WASDE Report, and USDA Foreign Ag Service PSD Online Data


Table 2. World Soybean Production Forecasts for “New Crop” 2015/16, “Current Crop” 2014/15, & 2013/14 Marketing Years

World Soybean Production                                                 by Major Country / Region

Soybean Production: New Crop 2016/17     June 2016

Soybean Production: May 2016 New Crop 2016/17                   (1 month ago)

New Crop 2016/17 Production:               June Less May                

New Crop 2016/17 Production:                Percent (%)         June 2016 of May 2016

June  Soybean Production: Current 2015/16          

May Soybean Production: Current 2015/16

June Less May Soybean  Production             for 2015/16

New Crop 2016/17 Production             Less Current 2015/16

% New Crop 2016/17 Production of                         Current 2015/16

Soybean Production: 2014/15                           (2 years ago)

New Crop 2016/17 Production             Less 2014/15

% New Crop 2016/17 Production       of 2014/15

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

323.70

324.20

(0.50)

99.8%

313.26

315.86

(2.60)

10.44

103.3%

319.73

3.97

101.2%

United States

103.42

103.42

0.00

100.0%

106.93

106.93

0.00

(3.51)

96.7%

106.88

(3.46)

96.8%

Total Foreign

220.28

220.78

(0.50)

99.8%

206.32

208.92

(2.60)

13.96

106.8%

212.85

7.43

103.5%

Major Exporters

172.00

172.00

0.00

100.0%

164.30

166.70

(2.40)

7.70

104.7%

169.99

2.01

101.2%

Argentina

57.00

57.00

0.00

100.0%

56.50

56.50

0.00

0.50

100.9%

61.40

(4.40)

92.8%

Brazil

103.00

103.00

0.00

100.0%

97.00

99.00

(2.00)

6.00

106.2%

97.20

5.80

106.0%

Paraguay

9.00

9.00

0.00

100.0%

8.80

8.80

0.00

0.20

102.3%

8.10

0.90

111.1%

Major Importers

16.03

16.03

0.00

100.0%

15.19

15.39

(0.20)

0.84

105.5%

15.39

0.64

104.2%

China

12.20

12.20

0.00

100.0%

11.60

11.80

(0.20)

0.60

105.2%

12.15

0.05

100.4%

World less China

311.50

312.00

(0.50)

99.8%

308.35

308.35

0.00

3.15

101.0%

307.40

4.10

101.3%

% China of World

3.8%

3.8%

0.0%

100.2%

3.7%

3.7%

0.0%

0.1%

102.3%

3.8%

0.0%

99.1%

European Union - 28

2.40

2.40

0.00

100.0%

2.20

2.20

0.00

0.20

109.1%

1.83

0.57

131.1%

Japan

0.24

0.24

0.00

100.0%

0.24

0.24

0.00

0.00

100.0%

0.23

0.01

104.3%

Mexico

0.37

0.37

0.00

100.0%

0.33

0.33

0.00

0.04

112.1%

0.35

0.02

105.7%

Table 3. World Soybean Export Forecasts for “New Crop” 2016/17, “Current Crop” 2015/16, & 2014/15 Marketing Years

World Soybean Exports                                                 by Major Country / Region

Soybean Exports: New Crop 2016/17     June 2016

Soybean Exports: May 2016 New Crop 2016/17                   (1 month ago)

New Crop 2016/17 Exports:               June Less May          

New Crop 2016/17 Exports:                Percent (%)         June 2016 of May 2016

June Soybean Exports: Current 2015/16          

May Soybean Exports: Current 2015/16

June Less May Soybean  Exports             for 2015/16

New Crop 2016/17 Exports Less Current 2015/16

% New Crop 2016/17 Exports of Current 2015/16

Soybean Exports: 2014/15                           (2 years ago)

New Crop 2016/17 Exports             Less 2014/15

% New Crop 2016/17 Exports       of 2014/15

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

137.71

138.31

(0.60)

99.6%

132.04

132.58

(0.54)

5.67

104.3%

126.15

11.56

109.2%

United States

51.71

51.30

0.41

100.8%

47.90

47.36

0.54

3.81

108.0%

50.17

1.54

103.1%

Total Foreign

86.00

87.00

(1.00)

98.9%

84.14

85.23

(1.09)

1.86

102.2%

75.99

10.01

113.2%

Major Exporters

77.79

78.29

(0.50)

99.4%

76.45

77.60

(1.15)

1.34

101.8%

68.70

9.09

113.2%

Argentina

10.65

10.65

0.00

100.0%

11.40

11.40

0.00

(0.75)

93.4%

10.57

0.08

100.8%

Brazil

59.70

60.20

(0.50)

99.2%

58.75

59.50

(0.75)

0.95

101.6%

50.61

9.09

118.0%

Paraguay

4.75

4.75

0.00

100.0%

4.60

4.60

0.00

0.15

103.3%

4.49

0.26

105.8%

Major Importers

0.34

0.34

0.00

100.0%

0.33

0.33

0.00

0.01

103.0%

0.29

0.05

117.2%

China

0.15

0.15

0.00

100.0%

0.15

0.15

0.00

0.00

100.0%

0.14

0.01

107.1%

World less China

137.56

138.16

(0.60)

99.6%

132.21

132.21

0.00

5.35

104.0%

125.83

11.73

109.3%

% China of World

0.1%

0.1%

0.0%

100.4%

0.1%

0.1%

0.0%

0.0%

96.1%

0.1%

0.0%

98.0%

European Union - 28

0.15

0.15

0.00

100.0%

0.15

0.15

0.00

0.00

100.0%

0.12

0.03

125.0%

Japan

0.00

0.00

0.00

#DIV/0!

0.00

0.00

0.00

0.00

#DIV/0!

0.00

0.00

#DIV/0!

Mexico

0.00

0.00

0.00

#DIV/0!

0.00

0.00

0.00

0.00

#DIV/0!

0.00

0.00

#DIV/0!

Table 4. World Soybean Import Forecasts for “New Crop” 2016/17, “Current Crop” 2015/16, & 2014/15 Marketing Years

World Soybean Imports                                                 by Major Country / Region

Soybean Imports: New Crop 2016/17     June 2016

Soybean Imports: May 2016 New Crop 2016/17                   (1 month ago)

New Crop 2016/17 Imports:               June Less May              

New Crop 2016/17 Imports:                Percent (%)         June 2016 of May 2016

June Soybean Imports: Current 2015/16          

May Soybean Imports: Current 2015/16

June Less May Soybean  Imports             for 2015/16

New Crop 2016/17 Imports             Less Current 2015/16

% New Crop 2016/17 Imports of Current 2015/16

Soybean Imports: 2014/15                           (2 years ago)

New Crop 2016/17 Imports             Less 2014/15

% New Crop 2016/17 Imports       of 2014/15

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

136.02

136.02

0.00

100.0%

130.78

131.08

(0.30)

5.24

104.0%

123.51

12.51

110.1%

United States

0.82

0.82

0.00

100.0%

0.82

0.82

0.00

0.00

100.0%

0.90

(0.08)

91.1%

Total Foreign

135.21

135.21

0.00

100.0%

129.96

130.26

(0.30)

5.25

104.0%

122.61

12.60

110.3%

Major Exporters

0.36

0.36

0.00

100.0%

0.36

0.36

0.00

0.00

100.0%

0.32

0.04

112.5%

Argentina

0.05

0.05

0.00

100.0%

0.05

0.05

0.00

0.00

100.0%

0.00

0.05

#DIV/0!

Brazil

0.30

0.30

0.00

100.0%

0.30

0.30

0.00

0.00

100.0%

0.31

(0.01)

96.8%

Paraguay

0.01

0.01

0.00

100.0%

0.01

0.01

0.00

0.00

100.0%

0.01

0.00

100.0%

Major Importers

114.18

114.18

0.00

100.0%

110.28

110.38

(0.10)

3.90

103.5%

105.26

8.92

108.5%

China

87.00

87.00

0.00

100.0%

83.00

83.00

0.00

4.00

104.8%

78.35

8.65

111.0%

World less China

49.02

49.02

0.00

100.0%

46.85

46.85

0.00

2.17

104.6%

43.73

5.29

112.1%

% China of World

64.0%

64.0%

0.0%

100.0%

63.9%

63.9%

0.0%

0.0%

100.1%

64.2%

-0.2%

99.7%

European Union - 28

12.60

12.60

0.00

100.0%

13.20

13.20

0.00

(0.60)

95.5%

13.39

(0.79)

94.1%

Japan

3.10

3.10

0.00

100.0%

3.10

3.10

0.00

0.00

100.0%

3.00

0.10

103.3%

Mexico

4.00

4.00

0.00

100.0%

3.95

3.95

0.00

0.05

101.3%

3.82

0.18

104.7%

Table 5. World Soybean Crush Forecasts for “New Crop” 2016/17, “Current Crop” 2015/16, & 2014/15 Marketing Years

World Soybean Crush                                                 by Major Country / Region

Soybean Crush: New Crop 2016/17     June 2016

Soybean Crush: May 2016 New Crop 2016/17                   (1 month ago)

New Crop 2016/17 Crush:               June Less May                

New Crop 2016/17 Crush:                Percent (%)         June 2016 of May 2016

June Soybean Crush: Current 2015/16          

May Soybean Crush: Current 2015/16

June Less May Soybean  Crush for 2015/16

New Crop 2016/17 Crush             Less Current 2015/16

% New Crop 2016/17 Crush of Current 2015/16

Soybean Crush: 2014/15                           (2 years ago)

New Crop 2016/17 Crush             Less 2014/15

% New Crop 2016/17 Crush       of 2014/15

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

288.44

288.39

0.05

100.0%

279.33

279.41

(0.08)

9.11

103.3%

263.26

25.18

109.6%

United States

52.12

52.12

0.00

100.0%

51.44

51.17

0.27

0.68

101.3%

50.98

1.14

102.2%

Total Foreign

236.32

236.27

0.05

100.0%

227.89

228.24

(0.35)

8.43

103.7%

212.29

24.03

111.3%

Major Exporters

88.75

88.75

0.00

100.0%

90.03

90.03

0.00

(1.28)

98.6%

84.30

4.45

105.3%

Argentina

44.30

44.30

0.00

100.0%

45.70

45.70

0.00

(1.40)

96.9%

40.02

4.28

110.7%

Brazil

40.00

40.00

0.00

100.0%

40.00

40.00

0.00

0.00

100.0%

40.44

(0.44)

98.9%

Paraguay