Menu

Soybean Balance Sheet Projections Remain Unsettled

The USDA will release the monthly World Agricultural Supply and Demand Estimates (WASDE) report on Oct. 9. For soybeans, there are a number of potential changes in the supply and consumption projections that were made in the September report.

On the supply side, the forecast of planted and harvested acreage of soybeans in the October report will reflect any new information coming from the National Agricultural Statistics Service (NASS) crop production survey as well as administrative data, primarily from the Farm Service Agency (FSA).

According to University of Illinois agricultural economist Darrel Good, producers participating in federal farm programs report planted acreage to the FSA. Reporting is typically almost completed by October.

“Those reported plantings provide additional input into the NASS forecast of planted and harvested acreage,” Good said. “In the previous five years, the NASS forecast of harvested acreage in October (November in 2013) ranged from about 700,000 acres less than the September forecast to about 1.1 million acres more than the September forecast. Based on the FSA reports of planted acreage in September this year, we expect the October NASS forecast of harvested acreage to be less than the September forecast of 83.5 million acres (see Weekly Outlook for Sept. 21, 2015).

The October forecast of the U.S. average yield of soybeans will reflect information collected in the late September/early October survey of a sample of producers as well as information collected in field measurements in 11 states during the same time period.

“Over the past 44 years, there was a slight tendency (55 percent) for the yield forecast to increase in October following an increase in the forecast from August to September as was the case this year,” Good said. “Basing yield expectations on a limited number of non-random farmer yield reports during the first half of the harvest can be very misleading. Those reports this year, however, have been heavily weighted by instances of very high yields across much of the Midwest. The exceptions have been in the areas that received excessive precipitation early in the season. While some expect yields of later-planted acreage to be lower, an increase in the U.S. average yield from the September projection of 47.1 bushels would not be a surprise.”

The magnitude of old-crop soybean supplies on hand at the start of the 2015-16 marketing year (Sept. 1) was estimated at 191 million bushels in the USDA’s Grain Stocks report released on Sept. 30. “That is 19 million bushels less than forecast in the September WASDE report,” Good said. “Smaller beginning stocks and a smaller forecast of harvested acreage would reduce the projected supply of soybeans for the current marketing year, while a higher yield forecast would increase the supply forecast. Our expectation is that the net result will be a larger projection of marketing-year supplies than the 4.175 billion bushels forecast last month. Expectations by market participants about the direction and magnitude of the change are widely varied,” he said.

The WASDE report will also update projections of the magnitude of the domestic crush and exports during the current marketing year.

“Expectations for changes in the projection of the domestic crush may be influenced by the newly released Fats and Oils: Oilseed Crushings, Production, Consumption and Stocks report,” Good said. “This USDA report replaces the Census Bureau report of monthly soybean crush that was discontinued after June 2011. Since then, USDA has estimated the magnitude of the marketing-year crush based on National Oilseed Processor Association (NOPA) monthly estimates of crush by member firms.

“From 2010-11 through 2014-15, the USDA estimate of the marketing-year crush has typically been about 5 percent higher than the NOPA crush estimate, consistent with the previous relationship between annual NOPA and Census crush estimates,” Good said. “The newly released report has estimates for the soybean crush in May through August this year. Those estimates exceeded NOPA estimates by 5 percent for May, 6 percent for June, 7 percent for July, and 8 percent for August. While monthly ratios of NOPA and Census crush estimates varied historically, these newly released estimates hint that the recent crush may have actually been larger than estimated in the WASDE reports. If that is the case, the projection for the crush during the current marketing year could be increased modestly from the September projection of 1.87 billion bushels.”

Without much new information about the likely size of the 2016 South American soybean harvest, Good said expectations for the marketing-year export projection will likely reflect recent export sales activity. Weekly sales were large for the week ended Sept. 24, reflecting large purchases by China, and some very large daily sales have been reported since then. Still, export commitments are running well behind those of last year, suggesting that the September projection of 1.725 billion bushels will not be increased in the October report.

“The upcoming USDA projections are not expected to alter expectations for abundant year-ending stocks of soybeans,” Good said. “Those stocks were projected at 450 million bushels last month, and the projection is expected to be near that level in the October WASDE report. Last September, 2014-15 marketing year-ending stocks were projected at 475 million bushels. Those stocks turned out to be only 191 million bushels. Such a development is not expected this year.”

Source: University of Illinois 

Recent News

Disaster Avoided? Reviewing the 2019 Grain Ending Stocks Situation
11/19/2019

Grain markets in 2019 had a familiar feel – a late June rally that faded as concerns about the U.S. corn and soybean crops subsided (see futures prices for corn here, soybeans here). This was especially frustrating for producers hoping for a substantial price improvement after spring planting challenges and record prevented planting acreage. Given Mother Nature’s […]

Soybean Crush Prospects
11/19/2019

The release of the NOPA soybean crush estimates last Friday indicated crush levels picked up substantially in October.  Driven by a moderate export pace for soybeans and a decent crush margin, soybean crush appears back on track for the 2019-20 marketing year For the 2019-20 marketing year, the USDA projects soybean crush at 2.105 billion […]

USDA to Extend Flexibility on Crop Insurance Program
11/15/2019

The U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA) today announced it will continue to defer accrual of interest for 2019 crop year insurance premiums to help the wide swath of farmers and ranchers affected by extreme weather in 2019. Specifically, USDA will defer the accrual of interest on 2019 crop year insurance premiums […]

Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now