Approved by USDA’s World Agricultural Outlook Board Oil Crops Outlook Mark Ash Soybean Prices Supported by Strengthening Soybean Oil Market In its Crop Production—2019 Summary report, USDA published an estimate of the 2019/20 U.S. soybean crop at 3.558 billion bushels, up 8 million from the previous forecast. The small production gain for soybeans is based on an increase for the U.S. average yield by 0.5 bushel to 47.4 bushels per acre. USDA’s forecast of U.S. soybean exports for 2019/20 is unchanged at 1.775 billion bushels. With the forecast of domestic crush also unchanged, season-ending soybean stocks are still seen at 475 million bushels.25303540Dec-16Apr-17Aug-17Dec-17Apr-18Aug-18Dec-18Apr-19Aug-19Dec-19Cents/poundSource: USDA, Agricultural Marketing Service, Central Illinois Soybean Processor Bids.Central Illinois soybean oil prices climb to a 3-year high Economic Research Service | Situation and Outlook Report Next release is February 13, 2020 OCS-20a | January 14, 2020 2 Oil Crops Outlook, OCS-20a, January 14, 2020 USDA, Economic Research Service Domestic Outlook Soybean Price Gains Reflect Better Trade Climate with China This month, USDA’s National Agricultural Statistics Service published its Crop Production—2019 Summary report. The publication included an estimate of the 2019/20 U.S. soybean crop at 3.558 billion bushels, up 8 million from the previous forecast. The small production gain is based on an increase for the U.S. average soybean yield by 0.5 bushel to 47.4 bushels per acre. Improved yields for Illinois, Iowa, and Indiana more than offset reductions in Kansas, Minnesota, and North Dakota. In contrast, U.S. harvested acreage of soybeans declined by 605,000 acres from the previous estimate (to 75 million acres) mainly on account of reductions for South Dakota, North Dakota, and Nebraska. By December 1, 4 percent of the soybean acreage was still unharvested because of unfavorable weather last fall. This spring, USDA will conduct a resurvey of production in States where there was an unusually high level of unharvested soybean acreage, particularly Michigan, North Dakota, and Wisconsin. USDA’s Grain Stocks reported U.S. soybean stocks on December 1 at 3.252 billion bushels, compared to the 3.746 billion bushels on hand a year earlier. Total stocks declined by 13 percent from last year while on-farm stocks are down 21 percent. The inventory decline for soybeans is due to a much smaller harvest and gains for the first-quarter use. Almost all of the improvement in first-quarter soybean use stems from higher export demand. Compared to a year earlier, U.S. export shipments of soybeans for September–December 2019 were considerably faster—up 26 percent to 792 million bushels. Nearly all of the year-to-year improvement can be attributed to higher exports for China, which have gained by 326 million bushels from the year earlier pace. Despite a recovery in the rate of U.S. export shipments, total sales of soybeans for 2019/20 are still lagging. As of January 2, export sales commitments for 2019/20 are down 2 percent from a year earlier. On January 15, a pending U.S. trade agreement with China is expected to be finalized to help calm a long-running conflict. No terms of the agreement have yet been made public regarding targets for China’s volume of agricultural imports. So far, few new U.S. soybean sales can be attributed to the accord. However, market optimism that major sales could soon materialize has rallied prices for soybean futures contracts near their highest level since mid-2018. Farmers could exploit this opportunity by accelerating crop marketing at the 3 Oil Crops Outlook, OCS-20a, January 14, 2020 USDA, Economic Research Service higher price level. These circumstances are reflected by USDA’s forecast increase for the 2019/20 U.S. average farm price this month by 15 cents to $9.00 per bushel. Stronger U.S. prices, though, may also discourage soybean sales into other foreign markets, tempering any impact of better trade relations with China. Foreign competition will stay formidable, as well, as USDA anticipates that exports from a record-high South American new-crop soybean harvest will soon come onto the global market. USDA’s forecast of U.S. soybean exports for 2019/20 is unchanged at 1.775 billion bushels. With the forecast of domestic crush also unchanged, season-ending soybean stocks are still seen at 475 million bushels. Nevertheless, this inventory would be well below the 2018/19 carryout of 909 million. Robust Demand Outlook Rallies Soybean Oil Prices Last month, Congress passed a bill to fund 2020 Government spending. The new funding legislation included extensions for several federal tax credits, including one for blending biodiesel. The $1-per-gallon biodiesel credit had expired at the end of 2017, but is now extended through 2022 and retroactively for 2018 and 2019. Also, the Environmental Protection Agency (EPA) used its authority under the Renewable Fuels Standard to set 2020 ...
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