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Soybean Comments after the June 2017 WASDE

Posted By Doane Advisory Services | June 12, 2017 6:19 PM CDT

Soybeans

USDA increased its 2016/17 soybean ending stocks forecast by 15 million bushels to 450 million bushels. Trade expectations were lower. An example was the Dow Jones poll at 432 million bushels. Our Doane forecast was also higher. There was no surprise that USDA cut the crush forecast by 15 million bushels. A surprise was that USDA did not increase the export forecast, even though there are commitments that now exceed the USDA forecast by 103 million bushels. Doane retains a higher forecast at 2075 million bushels. USDA is forecasting the average cash price at $9.55, unchanged from last month.

 

USDA increased the foreign production forecast by 3.27 million tonnes to 230.83 million. The net change was driven by an increase of 2.4 million tonnes for Brazil’s forecast to 114.0 million and Argentina’s production forecast by 800,000 tonnes to 57.8 million tonnes. Global production totals 351.31 mmt, up by the aforementioned 3.27 mmt in the foreign balance sheet. USDA forecasts trade basically unchanged, but with Argentina’s exports down 500,000 and Brazil’s up 500,000 tonnes from last month. USDA’s global demand forecast at 331.23 mmt was basically unchanged as well. Global ending stocks increase by 3.07 mmt to 93.21 mmt. U.S., Argentine and Brazil’s ending stocks forecasts were higher.

 

USDA forecasts new-crop 2017/18 ending stocks higher year-over-year at 495 million bushels. That was up 15 million from last month and was entirely due to the higher carry-in. There were no other changes from last month. The stocks forecast was close to trade averages. In the Dow Jones poll, the analyst average forecast was at 498 million bushels. The price range forecast is very wide, ranging $2 between the high and low - $8.30 to $10.30 with a mian price forecast of $9.30. That is unchanged. 

 

USDA updated its global supply/demand forecasts for 2017/18. There was very little change in the production or use forecasts. What changed was the carry-in and that carried to the ending stocks. USDA forecasts ending stocks at 92.22 mmt, up from 88.81 mmt last month. That is an increase of 3.41 mmt. We would note that it is down year-to-year, but historically high.

 

Soybean prices traded a little higher post report but were largely indifferent to the new USDA forecasts. Much more attention is on U.S. weather patterns with some buying associated with expectations for a warm and dry weekend.

 

SOYBEAN PRODUCTS

SOYBEAN OIL

 

USDA reduced its soybean crush forecast by 15 million to 1910 million bushels for the product year. The soyoil yield forecast was unchanged at 11.61 pounds. The production estimate dropped 175 million pounds. Soybean oil ending stocks are estimated at 1.987 billion lbs., down 75 million lbs. from last month. The food, feed & other industrial use category declined 100 million pounds. Total use for biodiesel was unchanged at 6.2 billion pounds. The price forecast was set at 31.75 cents, unchanged from last month.

Globally, USDA minimally reduced the 2016/17 total crush forecast to 290.57 mmt from 290.68 mmt last month. The forecast for global soyoil production declined from 54.29 mmt to 54.27 mmt. Global soybean oil carryout declined by 0.06 mmt from May to 3.63 mmt. USDA anticipates 2016/17 global vegetable oil ending stocks little changed at 18.54 mmt, down from 20.18 mmt in 2015/16.

In the U.S. outlook for 2017/18, the only change was the carry-in. USDA forecast year-to-year ending stocks up 170 million pounds to 2157 million, but down 75 million from last month. USDA forecast cash prices ranging from 30.00 to 34.00 cents per pound, mean at 32.00 cents, and unchanged from last month.

Briefly, USDA forecasts global 2017/18 crush at 301.53 mmt, unchanged from last month and up from 290.57 mmt in 2016/17. USDA sees global new-crop use increasing to 55.90 mmt from 53.64 mmt in 2016/17. In terms of global vegetable oil ending stocks, those project higher for 2017/18 at 19.79 mmt from 18.54 mmt year-to-year, but down month-to-month from 20.00 mmt.

Soybean oil prices were higher following the reports. Ending stocks forecasts are lower following the reduction in the U.S. crush forecast.

 

SOYBEAN MEAL

 

USDA reduced its soybean crush forecast by 15 million to 1910 million bushels for the product year. The soymeal yield forecast decreased 0.10 to 46.95 pounds. The production estimate dropped 450,000 short tons. The domestic use projection was reduced 350,000 short tons to 33.150 million. The export forecast was reduced by 100,000 tons to 12.0 million. The price forecast was lowered by $5 to $315. 

Globally, USDA minimally reduced the 2016/17 total crush forecast to 290.57 mmt from 290.68 mmt last month. USDA forecasts global soybean meal production at 227.73 million tonnes, which was down from 227.92 mmt last month.

In the U.S. outlook for 2017/18, there were no changes in the USDA forecasts.

USDA forecasts global 2017/18 crush at 301.53 mmt, unchanged from last month, and up from 290.57 mmt in 2016/17. USDA sees global new-crop use increasing to 233.97 mmt from 223.13 mmt in 2016/17. Global production is forecast at 236.92 mmt, unchanged from last month, and up from 227.73 mmt, year-over-year.

Soybean meal prices were little changed following the release of the new data.