While the market expected a decrease in planted acres across the United States due to a wet planting season, the U.S. Department of Agriculture surprised the market, slashing soybean acres by 2.7 million acres. Regardless, farmers are still pegged to produce a record U.S. Soy crop, weather permitting.
The U.S. Department of Agriculture released its June 30 Grain Stocks and Planted Acreage reports that put U.S. Soy acres at 88.3 million acres (35.7 million hectares) and showing record export demand for U.S. Soy during March through May.
“As global supplies of soy are tight, the world is watching U.S. Soy production,” said Jim Sutter, CEO of the U.S. Soybean Export Council (USSEC). “Now is the time to look carefully and critically at the global environment, what your customers expect and what you expect.
“Russia’s war on Ukraine, the aftermath of COVID, spiking inflation, and supply chain disruptions all remind us of our shared responsibility to work together. U.S. Soy farmers are maximizing production of nutritious, sustainable U.S. Soy so that our customers and their customers’ families around the world can reliably and readily access nutritious, safe, and affordable food every day.”
Mac Marshall, who joined Sutter on screen for the U.S. Soy Stocks and Planted Acreage Report webinar, noted that traders were looking for a reduction from the March plantings report, but not of this magnitude.
While many states saw increases in planted soybean acres, North Dakota saw the biggest change with the March figure revised down by 1.1 million acres (0.4 million hectares), bringing it to 5.9 million acres (2.4 million hectares). Wet conditions in North Dakota have made it very difficult to get acres planted, explained Marty Ruikka, President of The ProExporter Network.
Even though USDA slashed soybean acres from 91 million acres (36.8 million hectares) in its March report to 88.3 million acres (35.7 million hectares), it’s still the highest soybean area planted since 2018, said Marshall, who serves as Vice President of Market Intelligence for USSEC and the United Soybean Board.
“If we assume a trend yield of 51.5 bushels per acre (3.46 MT per hectare), the reduction in planted area implies a drop in production of about 130 million bushels (3.5 MMT),” he said. “However, the crop size would still be a record at 4.5 billion bushels (122.5 MMT).”
Sutter spotlighted that these numbers are reflective of U.S. Soy farmers adoption of innovation and sustainable intensification.
Since 1982, U.S. forestland has increased 5.2 million acres (2.1 million hectares) while cropland has decreased about 49.4 million acres (20 million hectares). Additionally, U.S. soybean farmers have improved their greenhouse gas emissions, decreasing it by 43% per bushel while increasing production 130% since 1980.
“Carbon footprint matters in many markets,” Sutter said. “U.S. Soy has the lowest carbon footprint compared with soy from other major origins, according to Blonk Consultants and the Global Feed LCA Institute. These things positively impact customers’ ability to have a sustainable footprint around the world.”
Demand for U.S. Soy Holds
Looking at U.S. Soy stocks, USDA analysts estimated June 1 inventories at 971 million bushels (26.4 MMT). Marshall said this was within trade expectations and a 26% increase from March 1, 2021.
The June 1 inventory levels imply March-May quarterly disappearance of 960 million bushels (26.1 MMT).
“This would be the largest pace of demand during that quarter on record,” Marshall said. With December-February disappearance clocking in at more than 1.2 billion bushels (32.7 MMT), total demand for U.S. Soy during the past six months has been quite robust as crush remains strong and we see counter-seasonal strength in exports.”
Ruikka added that we now show a 205-million-bushel carryout (5.6 MMT), which is pretty small historically.
“It’s less than last year’s carryout, and it’s part of the reason for the high prices,” he said. “If we get the 51.5 bushel-per-acre yield (3.46 MT per hectare) on the current acres and we have an export program for new crop (22/23) of 2.2 billion bushels (59.9 MMT), our carryout would drop to less than 150 million bushels (4.1 MMT). This is a very low carryout.
“Given that we’re starting with a low carryout and we have projections for a low carryout, it makes the growing season (the way the weather gets traded) riskier. Everyone is going to be on the knife’s edge for the whole growing season. We need good harvest conditions as well. We will be in a weather market all the way through harvest in November.”
Carlos Salinas, USSEC Regional Director for the Americas, said he has been surprised by the resiliency of the trade flows of U.S. Soy to customers in Latin America in the context of high prices.
For the week ending June 16, USDA reports accumulated exports of soybeans already shipped at 5.3 MMT to the region, compared to 5.1 MMT during the same time last year. Furthermore, outstanding sales for U.S. soybeans (commitments that are on the books and yet to be executed this week) are at 1.3 MMT, compared to 900,000 MT during this same time last year.
Salinas said when you look at crush in destination markets, the Americas region has also benefitted from expanding margins.
“It’s understandable that crushers want to have stocks on position; they want to buy ahead,” he said, adding that they are very well positioned logistically to execute and lock in those crush margins.
Salinas explains the region is mostly a soybean meal market and accumulated exports for soybean meal in the region are at 5.6 MMT for soybean meal exports, compared to 5.4 MMT this time last year.
Country highlights include:
- Colombia’s accumulated exports are at 1.1 MMT, compared to 850,000 this same time last year.
- Ecuador shows significant growth at 591,600 MT, compared to 498,000 MT this time last year.
- Venezuela up at 210,300 MT, compared to 173,100 MT during this time last year.
Furthermore, there are 1.8 MMT in open commitments for soybean meal.
“I believe the industry realizes the importance of supply chains,” Salinas said. “While the market is inverted, buyers want to ensure they are logistically positioned and have the supply needed to feed their animals. It’s a good reaction to see, but it tells you we are a very inelastic market.
For all the highlights, be sure to watch on-demand above.
— Partially funded by U.S. soybean farmers, their checkoff and the soy value chain.