For the fourth month in a row, the USDA raised its estimate for US soybean exports for 2021/22, underlining the heightened global buying interest for US soybeans in the wake of Brazil’s drought-hit crop.
In its June WASDE report, the USDA projected soybean exports of 2.170 billion bushels (59.1 million tonnes), a 1.4% increase from the previous month’s estimate and nearly 5% above the agency’s initial export forecast made a year ago.
Gro’s soybean export forecast model also has risen steadily in recent months, as total export sales commitments soar above historical averages. Gro’s model predicts that 2021/22 soybean exports will sharply exceed the current USDA projections.
US soybean exports for 2022/23 also look to be strong, as new crop soybean sales, already at more than 12.7 million tonnes, are at a record high for early June. Most of the new crop sales are to China and “unknown” destinations.
Also driving US soybean consumption is growing demand from domestic crushing facilities, which are rushing to supply refiners with soybean oil as feedstock for the expanding renewable diesel industry. Crush demand is forecast to rise 3.5%, to 2.215 billion bushels, in 2021/22 from a year ago, and increase another 1.8% in 2022/23, according to the USDA.
Underscoring the heightened demand for the vegetable oil, soybean oil’s contribution to total profits from the crushing process, commonly called oil share, has been hovering at around 50%, a level that has only been reached a handful of times in the past 20 years. The remainder of the crush value comes from soybean meal.
The USDA dropped its estimate for 2021/22 soybean ending stocks to 205 million bushels, a 13% decline from last month’s projection and the lowest level in six years. That puts further pressure on the current year’s crop — even with a record number of acres planted to soybeans, strong yields will be needed to rebuild inventories. Gro’s machine-learning US Soybean Yield Forecast Model updates daily with yield estimates down to the district level across the country.
Inverted futures prices are reflecting the tight soybean supplies. The July soybean contract is currently trading 83.5 cents per bushel above the August contract, the widest premium the spread has seen in at least two decades.
Soybean prices got support early this year after Brazil's soybean crop was hit by drought brought on by La Niña. This week, the US Climate Prediction Center warned that La Niña is likely to return for a third year, a rare occurrence that could once again bring dry conditions for the upcoming South American growing season.
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