The November WASDE report noted an increase in the production of U.S. soybeans, up to 3.258 billion bushels despite a decline in harvested acres.
With soybean harvest being wrapped up across the country, let’s take a moment to look at the current U.S. soybean situation. The November WASDE report noted an increase in the production of U.S. soybeans up to 3.258 billion bushels despite a decline in harvested acres. The harvested acres came in lower at 75.7 million acres, a reduction of 0.7 million acres compared to the September reports.
However, this decline was outpaced by improved yields. A yield increase from 41.2 to 43 bushels per acre was cited. To compare this to previous years, this production level is very similar to our 5-year average production which saw highs in 2009 and 2010. The U.S. stocks-use ratio for the 2013/14 marketing year is 5.2 percent. This is a steady increase from 4.6 percent in the previous year.
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On the world stage, production is relatively high in comparison to recent years. A world production level of the current 10.42 billion bushels is higher than the two previous years by 0.58 billion bushels in 2012/13 and 1.63 billion bushels in 2011/12. While the U.S. plays a significant role in global production, other significant producers include Brazil and Argentina. These three largest soybean producing countries are all anticipating larger production numbers for marketing year 2013/14 than in 2012/13. The world stocks-use ratio for the 2013/14 marketing year is projected at 26 percent. This again is a steady increase from 21.5 percent to 23.3 percent in the two previous years.
From a marketing standpoint, all eyes will continue to be focused on China. Their purchases of U.S. soybeans have far exceeded expectations. The USDA-ERS indicates commitments to China are already at 98 percent of the total sales to that country in 2012/13. Still, several market situations may indicate a more bearish soybean outlook. Supply has trended higher with ending stocks above average. Plantings in South America are underway and early weather appears to be cooperating. Also a factor will be the recent pullback in U.S. corn prices. This may lead to a larger number of acres being planted to soybeans that have been in corn.
The expectation of strong world production may be enough to outpace China’s demand. Nearby futures contracts have performed well over the past month with later contracts lagging. South America’s soybean crop is far from harvested at this point and infrastructure concerns do exist. This anticipation of strong production from the world’s largest producers and ample supply could lead to a retreat in soybean prices in 2014.
Scott Clawson, Oklahoma Cooperative Extension Service, Area Ag Economics Specialist
Mark Welch, Texas A&M AgriLife Extension Service Economist