The USDA forecast higher global demand for US soybeans and soybean oil, as South American production declines and worldwide inventories of vegetable oils tighten, due in part to the Russia-Ukraine war.
In its April WASDE report, the USDA raised its outlook for 2021/22 soybean exports by 1.2% to 2.115 billion bushels (57.6 million tonnes) compared with the previous month’s estimate. But Gro’s export forecast model predicts even higher global buying interest for US soybeans, and that exports will sharply exceed current USDA projections.
Already US new crop soybean sales, at more than 8.5 million tonnes, are three times greater than at this time last year, with most of the sales to China and “unknown” destinations.
The USDA estimated soybean ending stocks of 260 million bushels, a 9% drop from last month’s projection and close to the lowest level in six years. In light of the forecast reduction in soybean stocks, an expected increase in soybean planted acreage will be critical to replenishing US inventories in 2022/23.
Tight global supplies of vegetable oils pushed US soybean oil exports higher in March, despite elevated prices. For the full year, the USDA estimates exports of 1.725 billion pounds, which is 6.2% above the agency’s projection last month.
Download Gro’s new Strategic Assessment, Fuel for the Fire: The Russia-Ukraine War and Vegetable Oil Prices, to learn more about what’s driving prices for these key food commodities.
The USDA left US corn exports unchanged despite projecting a 16% reduction in Ukraine corn exports due to the war. In addition, China has stepped up its buying, this week making its largest purchase of US corn in nearly a year, split between old and new crop.
Much of the outlook for corn will depend on Brazil's second corn crop, or safrinha, which has had favorable conditions thus far. But much of the crop will enter the critical phase of development during April, and forecasts for central Brazil are calling for drier weather.
The USDA raised its Brazil corn production estimate by 2%. Gro users can monitor daily updates to the crop’s outlook with Gro’s Brazil Corn Yield Forecast Model.
South American soybeans are less fortunate. The USDA reduced its Brazil soybean production estimate by 2% to 125 million tonnes, bringing the agency’s projection closer in line with Gro’s Brazil Soybean Yield Forecast Model. Paraguay’s soybean production was also reduced to 4.2 million tonnes, down 58% year over year to the lowest level in 10 years as the country suffers severe drought. For Argentina, where soybean harvest is in its early stages, the USDA left production estimates unchanged at 43.5 million tonnes, below Gro’s own forecast.
Despite the Russia-Ukraine war’s disruption of wheat exports from the Black Sea region, the US isn’t expected to see an increase in buying interest. The USDA slightly lowered its US wheat export estimate to the lowest level in six years, as the US remains uncompetitive to most markets. The wheat ending stocks estimate was raised, but is still projected to be 20% lower than last year.