January 2021 WASDE: Lowered Production and Yields Further Tighten Soy Balance Sheet

Market analysts provide an in-depth look at USDA’s January 2021 WASDE as it pertains to U.S. Soy.

The U.S. Soybean Export Council (USSEC) held its monthly World Agricultural Supply and Demand (WASDE) briefing on January 12, featuring Mac Marshall, United Soybean Board (USB) and USSEC VP of Market Intelligence and analyst Nagaraj Meda, Managing Director, TransGraph Consulting.

USSEC CEO Jim Sutter provided opening remarks, reiterating that USSEC is always available to help its customers through various means such as the WASDE webinar, especially during what he referred to as “interesting and challenging times.”

January Key Revisions

Marshall began his report with key revisions to the January soy complex. Each January, he explained, the U.S. Department of Agriculture (USDA) issues adjustments to the prior year’s crop size, incorporating updated information on prevented plantings and yield.

He began with the U.S. side. This update saw USDA revise its yield estimate for the 2020 U.S. soybean crop size. The downward revision to production contributed to a reduction in projected 20/21 ending stocks, further tightening an already tight balance sheet. “It comes as no surprise,” Marshall stated,” that this marketing year has seen an exceptionally robust pace of U.S. soybean exports.” Thus, one item he was looking for in the January WASDE was to see if USDA would issue an upward revision to its export estimate for U.S. soybeans, which it did, projecting its highest WASDE estimate for U.S. soy exports since November 2017. Increased prices were also reflected in this estimate. Additionally, soymeal purchasing and domestic use of soybean oil both rose.

On the international side, world ending stocks were also revised downwards, driven in part by another downward revision to Argentina’s projected output. South America continues to experience dryness in their major growing regions this planting season. USDA did not revise expected production from Brazil in this month’s report but did provide downward revisions to Argentina and Uruguay’s crop sizes. Marshall also noted increases to Chinese demand and production.

Long-Term Supply and Demand

Marshall also provided some longer-term perspective on supply and demand for soy. USDA projects Chinese imports to be record high this season. Globally, total consumption is also projected to outpace the 10-year growth trend with most of that incremental growth occurring outside the United States.

Perspective from India

Nagaraj Meda, Managing Director, TransGraph Consulting, a pioneer in risk management and hedge models, also provided his perspective on the WASDE, reiterating robust Chinese soybean demand and its recovering hog market. Meda also discussed a bird flu outbreak in India.

U.S. Soy’s Commitment

“We at U.S. Soy remain committed and positioned to supply and nourish an ever-growing and evolving world,” concluded Marshall.

To watch the USSEC January WASDE update in its entirety, please click here. For more information about U.S. Soy, please visit USSOY.org.