Demand for U.S. Soy Remains Strong Near Term

While demand for U.S. Soy remains strong, as demonstrated by figures released Jan. 12 by the U.S. Department of Agriculture, one market analyst voices concerns regarding the global supply and demand balance sheet when taking the long view.

In its January World Agricultural Supply and Demand Estimates report, the U.S. Department of Agriculture lowered U.S. ending stocks by 10 million bushels to 210 million bushels. This is offset slightly by lower export projections, which USDA reduced by 55 million bushels to 2 billion bushels. 

USDA’s market analysts reasoned lower supplies, reduced import demand from China and a high than expected export forecast from Brazil. 

According to Market Analyst and Founder of Global Ag Protein, Emily French, the market rallied 30 cents on this news.  

“We are in a transition from a focus on the supply side to a focus on the demand side,” French said during the Jan. 12 U.S. Soy World Agricultural Supply & Demand Estimates report webinar. 

French called out wheat, saying it was down 60 cents. 

“I think we have lessons to learn from wheat, and those will ultimately be applied to soybeans and soybean meal,” she said. 

Meanwhile, if you look at the Baltic Dry Index, French said it typically makes it low for the calendar year in the first quarter. 

“That did not happen in 2022,” French pointed out, recalling the hype and hope of China reopening. However, she said she is not a believer. 

“I think the freight market is sending us a message,” she said. “If you look at prices, the message is: there are demand concerns that are just percolating and sitting in the backdrop.” 

French also called out the value dollar as being a big influencer but said it’s getting a little bit of breathing room, down from the highs we saw in 2022. 

While French might be bearish on the long-term outlook, Carlos Salinas, U.S. Soybean Export Council Regional Director for the Americas, points to positive signals with a more bullish near-term demand picture. 

Since Sept. 1, USDA reports that 20.6 million metric tons (MMT) of soy have been shipped to China, according to yesterday’s USDA Weekly Export Sales report.  

Export shipments to China are 500,000 metric tons (MT) ahead of where we were at this time last year, Salinas said. Couple this with outstanding sales (shipped & sold), U.S. Soy exports to China are up 11% at 26.8 MMT from last year. 

Looking more globally at the sales sheet, Salinas said when combined, accumulated exports and outstanding sales on soybeans to the Latin American region and Unknown destinations are up 5% and 58%, respectively. 

For international buyers of U.S. Soy, Salinas says it’s important to plan ahead, working within existing logistics and freight dynamics. 

“The current soybean meal market structure is reflecting steep inverses, as the market attempts to ration nearby demand via higher prices,” Salinas said. “In the face of this, outstanding soybean sales to China and unknown destinations are significantly higher than last year. 

“Soybean meal buyers should be proactive in securing logistics and physical supply well ahead of time. The most expensive feed is the one that you don’t have.” 

Stepping away from the trade and the market data, USSEC’s CEO Jim Sutter pointed out that the business environment continues to be influenced by what he calls the “4C’s”: COVID, Climate, Conflict and Currency.   

Sutter noted The World Economic Forum Global Risks Report 2023, published Jan. 11, also identified cost of living crisis, natural disasters and extreme weather events, and geoeconomic confrontation as the Top 3 risks during the next two years.   

“The WEF Global Risks Report 2023 reports this is the year of the #polycrisis, where risks are more interdependent and reciprocally damaging than ever,” Sutter said. “Currently, all eyes are on soy production in South America and the variables at play there – from quality to quantity and other happenings.  

“As a whole, I believe that the long-term trend of demand growth is intact. There are ups and downs and issues from the 4C’s I mentioned, but I think we’ll continue to see the long-term demand trend for protein going up.” 

— Stay tuned: The webinar will be made available in Spanish, Simplified Chinese, Traditional Chinese, Japanese, Vietnamese, and Korean.

This article is partially funded by U.S. Soy farmers, their checkoff and the soy value chain.


USDA Figures: Soybean Overview from the World Agricultural Supply & Demand Estimates Report 

Soybean production is estimated at 4.276 billion bushels, down 69 million led by reductions for Missouri, Indiana, Illinois, and Kansas. Harvested area is estimated at 86.3 million acres, down 0.3 million from the previous report. Yield is estimated at 49.5 bushels per acre, down 0.6 bushels. 

The soybean export forecast is reduced 55 million bushels to 2.0 billion, reflecting lower supplies, reduced import demand for China, and a higher export forecast for Brazil. With lower supplies only partly offset by reduced exports, ending stocks are projected at 210 million bushels, down 10 million from the previous forecast. 

The U.S. season-average soybean price for 2022/23 is projected at $14.20 per bushel, up 20 cents. The soybean meal price is projected at $425 per short ton, up 15 dollars. The soybean oil price forecast is unchanged at 68 cents per pound. The 2022/23 foreign soybean supply and demand forecasts include higher stocks and lower production, crush, and trade. Beginning stocks are raised due to an upward revision to Brazil’s 2021/22 soybean crop to 129.5 million tons, driven by higher-than-expected use through the end of the local year. 

Foreign 2022/23 soybean production is lowered 1.3 million tons as lower production for Argentina and Uruguay is partly offset by higher production for China and Brazil. Argentina’s soybean crop is reduced 4 million tons to 45.5 million on lower area and early season heat and dry weather conditions. China’s soybean crop is increased 1.9 million tons to 20.3 million on reports from China’s National Bureau of Statistics. Brazil’s crop is increased 1.0 million tons to 153.0 million on higher area. 

Foreign 2022/23 soybean crush is reduced 2.0 million tons mainly for Argentina and China. Argentina’s crush is reduced on lower supplies while crush for China is reduced on a lower than-expected pace during the first quarter of the marketing year. Partly offsetting is higher soybean crush for Brazil. Foreign soybean exports are reduced on lower exports for Argentina that are partly offset by higher exports for Brazil. China’s imports are lowered 2 million tons to 96 million on lower crush demand. With higher beginning stocks and lower use, global soybean ending stocks are increased 0.8 million tons to 103.5 million.