The USDA’s World Agricultural Supply and Demand Estimates (WASDE) report projects the nation’s soybean reserves will likely be at their lowest level in 50 years by the end of the 2011/12 marketing year, settling at 125 million bushels. That’s down 10 million from last month’s projections due to increased domestic crush, strong export demand and reduced U.S. production.
“The global demand for soybeans is off the charts and the world wants every bushel of soybeans it can get,” says Kirk Leeds, Iowa Soybean Association (ISA) CEO. “Domestic demand remains better than expected, as well. In addition to needing another good crop this year, we also need additional soybean acres in Iowa and the United States. Soybeans are a viable option for farmers and the demand is there.”
Leeds says farmers started last year with adequate soil moisture, a luxury that may not be repeated this year. He said most Iowa farmers were pleased with better-than-expected soybean yields in 2012.
“Our farmers pride themselves on their ability to be a dependable supplier,” adds Leeds. “People know that when you order soybeans from the United States, you will get soybeans from the United States. It’s why it’s imperative for us to maintain our infrastructure, from roads to rivers, to keep our commodities moving.”
Since the beginning of the year, soybean prices have risen about 10%. Soybean supply concerns in South America — shipping issues in Brazil and weather problems in Argentina reducing forecasted output — have been a contributing factor. The WASDE report projects the U.S. season-average soybean price will range from $13.55 to $15.05 per bushel, up 5 cents on both ends.
The WASDE raised its global soybean production estimate fractionally to 269.5 million tons as improved production prospects in Brazil offset deteriorating conditions in Argentina. Soybean production for Brazil is projected at a record 83.5 million tons, up 1 million from last month due to higher yields resulting from improved moisture in the center-west.
Prospects for the Argentina soybean crop have diminished in recent weeks due to an extended period of dry weather. As a result, that crop is projected at 53 million tons, down 1 million from last month.
“We keep our eyes on the global market and international competition,” says Grant Kimberley, ISA director of market development. “Soybean demand remains robust in places like China, and soymeal exports have also been strong. Even with a projected large crop from South America this year, U.S. soybean exports should remain steady due to perpetual logistic bottlenecks at ports in South America.”