Blown Away by the Soybean Export Number

John Newton, Ag Economist - University of Illinois

The price of soybeans has been dropping and many in the trade are very worried about the potential for futures to continue to move lower. However, as Todd Gleason reports, the February WASDE numbers may suggest some strength remains.

There may be some price strength left in the…
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There may be some price strength left in the soybeans despite an overwhelming supply. U.S. farmers raised a record soybean crop last fall and South American farmers are harvesting a record soybean crop right now. Yet, the United States Department of Agriculture thinks demand for soybeans from the U.S.A. is still on the uptick says University of Illinois Ag Economist John Newton.

Newton :20 …lead USDA to revise soybean exports up.
I think I was blown away by the soybean export number. We jumped up 20 million bushels from the January estimate from 1770 to 1790. Now, a few weeks ago soybean exports had slowed somewhat leading many to think we were hitting a point in the marketing year where soybean exports would slow for the rest of the year. And, instead, we’ve had some really nice weeks, back-to-back, where soybean exports have been above market expectations and I think that is what lead USDA to revise soybean exports up.
This bump in exports caused USDA to lower the old crop soybean ending stocks from 410 million bushels to 385 million. The drop was all about consumption.

Newton :17 …imports and exports there on soybeans.
Exports increased. The soybean crush was increased by 15 million bushels. That helps pull down the ending stocks from 410 to 385. Now, I think we did add 10 million additional bushels on the import side. So, those offset the imports and exports there on soybeans.
The Illinois number cruncher says it is difficult to categorize the 385 million bushel ending stocks figure as burdensome.

Newton :32 …fundamental supply and demand conditions.
It is not really burdensome, but it is a number to continue to watch throughout the marketing year. When we get the USDA Prospective Plantings (figure) in March, it should provide additional information on which way prices can move. Again, we look at the big picture fundamental supply and demand conditions.
The trade, at the moment, seems to have settled on a five million acre increase in the U.S. soybean crop for the coming year. This would come on the heels of a similarly large increase last year. Newton is not yet convinced this large a shift to soybeans in United States will take place.