Southeast Farm Press (3/12/2003) - Despite very tight stocks, robustprospects for use and exports, and an expected decline in U.S. plantingsthis year, soybean prices for 2003 are projected at $5.10 per bushel,"below what we would have expected based on historical data," says PeterRiley, agricultural economist for USDA's Farm Services Agency.
"Global soybean disappearance is quite striking," he said at the annualAgricultural Outlook Forum at Washington, D.C., "and even with the growthin South American soybean production, the U.S. keeps exporting moresoybeans, and there is little indication of a slowing near-term." Therehave been substantial gains in soybean products, too, he says.
So what's the problem?
"The size of the pie keeps growing," Riley says. Production in Argentinaand Brazil keeps expanding, and "they passed us in 2002." A larger worldcrop this year will increase the supply. "All this production hanging overthe market has held the price lower than we would have expected."
Analysts from USDA's World Agricultural Outlook Board, Economic ResearchService, Foreign Agricultural Service, and Farm Service Agency areprojecting U.S. planted acreage this year at 72.2 million, compared to73.8 million last year. Harvested area is forecast at 70.9 million acresand yield at 39.7 bushels, up from the preliminary estimate of 37.8 lastyear, but below the 1994 record 41.4 bushels.
Supply is projected at only 1 percent above 2002/03, with higherproduction partially offset by lower beginning stocks, which are at asix-year low of 165 million bushels.
Domestic use will be basically static at 1.840 million bushels, and crushup 1 percent at 1.670 million bushels. Soybean meal use is expected togrow about 1 percent to 2 percent, limited by slow expansion inpoultry/hog production and declining beef production. Meal price isprojected at $162.50 per ton. Soybean oil use is projected to rise about 2percent, with price in the 22 cents per pound range. Increased globalavailability of other vegetable oils and oilseeds are expected to keepprices from rising.
Recovery is expected for foreign oilseed and meal production, followingbelow-average 2002 crops in China, the European Union, India, Canada, andAustralia. While world oilseed output rose just one percent in 2002/03,relative strong vegetable oil prices and a return to more normal yieldsthis season may result in as much as 5 percent increase in global oilseedoutput for 2003/04. Expanded production of alternative protein meals maylimit the rate of increase in global soybean meal use and trade.
Thus, the analysts say, foreign consumption of soybean meal may grow moremoderately this year, compared to a 5 percent to 6 percent increase in2002/03.
While larger soybean crops in South America are still likely, acreage maynot expand quite as rapidly as in recent years because of a weaker priceoutlook, but near-record carryover stocks will again make Brazil andArgentina "potent competitors" in the international export market.
Imports of soybeans and meal by the European Union -- still the world'slargest market -- are expected to continue to show little growth, andgreater availability of domestically produced rapeseed and sunflowerseedmeals will limit growth in their imports. Reduced livestock feeding in theEU will also cut into demand for protein meal.
Much of the world's growth in soybean demand in 2003/04 will come fromChina and other Asian markets, the USDA analysts say, with "impressivegrowth rates" also in Latin America, the Middle East, and North Africa.
"The big driver for soybean exports has been China," says Peter Riley,"and the big story in recent years has been their trend to beans insteadof soybean products."
U.S. soybean exports are projected to be up just 1 percent, at 950 millionbushels, with world market share at about the 2002/03 level of 41 percentfor soybeans and 11 percent for meal.