Soybean prices may be trending down due to large domestic and global supplies, but Iowa Soybean Association leaders (ISA) are optimistic about the future since demand remains strong.
May soybeans on the Chicago Board of Trade fell a few cents per bushel after the release of today’s U.S. Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) Report. Even though the nearby futures price is less than $9.40 per bushel — more than $1 less than March 1 — ISA President Rolland Schnell said there’s enough positives in the report and other indicators that the market will rebound — eventually.
“I’m not optimistic about making a profit this year, but I’ve farmed a long time to know crop conditions, supplies and prices go in cycles. We’ll have to tighten our belts and be even more efficient,” said Schnell, who grows soybeans and corn near Newton. “However, with a growing world population and middle class, protein needs will continue to increase. I’m confident things will turn around.”
The U.S. is projected to export a record number of soybeans this marketing year at more than 2 billion bushels, which is unchanged from last month, according to the report. Domestic crush is forecast at more than 1.9 billion bushels, also unchanged from last month. Reduced residual disappearance, though, contributed to soybean ending stocks increasing 10 million bushels to 445 million.
China, the world’s top soybean importer, plans to purchase more than 3.2 billion bushels this marketing year from the U.S. and other suppliers, up nearly 37 million bushels from last month’s government estimates. Imports to the European Union are projected to increase as well to more than 536 million bushels. The USDA is forecasting global soybean meal consumption in 2016/17 to increase nearly 27 percent to 47.4 million metric tons.
“Based on our recent trade mission to China in early April, I remain optimistic we will continue to see steady growth in demand for more soybeans there and in other key countries across Asia and Southeast Asia,” ISA CEO Kirk Leeds said. “As these countries continue to move rapidly away from ‘back yard’ production in hogs, poultry and aquaculture, we know they will demand higher quality feed ingredients. This means greater demand for U.S. soybeans and soybean meal.”
In the meantime, several years of good growing conditions in the U.S. and many areas of South America — Brazil’s ongoing harvest is forecast at 111 million metric tons, according to the USDA — have led to large soybean stockpiles here and abroad. Global soybean stocks are projected at a record 87.4 million metric tons, 10.3 million more than a year earlier. A record 89.5 million acres of soybeans about to be planted in the U.S. will also continue to act as an anchor on the market.
The USDA lowered its season-average soybean price by 5 cents at the midpoint to $9.55 per bushel based on sales to date and expected lower prices for the second half of the marketing year.
“This tends to be the wrong time of the year to be bearish,” said Grant Kimberley, ISA market development director. “History shows during planting and the early part of the growing season there tends to be rallies that lead to selling opportunities.”
Leeds added, “U.S. soybeans have an overall quality advantage over our competitors and the good news is we have a cupboard that’s fully stocked with products to sell to our customers.”