The not-so-good news in the USDA's soybean outlook for the 2005/06 marketing year (as if the specter of Asian soybean rust wasn't enough) is that prices are expected to be lower — an average $4.50 per bushel, significantly below last year, and the lowest since 2001/02.
The good news is that the lower price and an expected continuing slide in the value of the U.S. dollar are projected to boost soybean exports.
“The outlook for U.S. exports throughout the soybean complex looks better than in recent years,” said Jerry Norton, agricultural economist for the Farm Services Agency, who presented the forecast at the annual USDA Agricultural Outlook Forum 2005 at Arlington, Va.
The report was prepared by members of the agency's Wheat, Feed Grains and Oilseeds Interagency Commodity Estimates Committees.
Soybean exports are expected to grow by 5 percent to 1,060 million bushels for the marketing year, Norton said.
“This increase would interrupt the long term decline in the U.S. market share of world soybean exports…Unlike last fall, there should be few reasons for producers to delay marketing, so the 2005/06 export pace is expected to strengthen quickly.”
South American producers are expected to see the falling price trend and rising production costs as a signal to suspend their 10-year-long expansion, he said.
“Despite slowing production growth, record large South American soybean stocks this year will boost 2005/06 supplies, but at a reduced rate. Oilseed producers in other countries, such as Canada, Australia and India, are expected to scale back on planted area from 2004 due to lower oilseed prices. With world output growth slowing, U.S. supplies are expected to be more competitive in world markets.”
Lower world prices will also stimulate consumption in trade in soybeans and soybean meal, the report noted.
China, with its ample crushing capacity and robust consumption of protein meal and vegetable oil, is expected to continue to dominate the growth of global soybean imports.
Growth potential in other Asian markets will likely be limited by the continuing effect of avian influenza (bird flu), the report said. Only modest consumption gains are seen for the European Union, a market that still accounts for nearly half of world soybean meal trade and one-fourth of world soybean trade.
“Abundant U.S. soybean supplies will make domestic processors more competitive in foreign markets,” Norton said. “Domestic requirements for soybean meal are growing moderately, so there will be a greater quantity available for export.”
U.S. soybean meal exports are projected to increase by 12 percent in 2005/06, to 6.4 million short tons. At that level, U.S. share of global soybean meal exports would register a slight improvement from 2004/05.
Exports of soybean oil are also anticipated to increase, rising 15 percent to 1.5 billion pounds.
“China's growth in vegetable oil consumption will continue to surpass its needs for protein meal, driving world soybean trade,” Norton said. “Domestic oilseed production in India is not expected to reach last year's level, prompting larger soybean oil imports. China and India account for over one-third of global soybean oil trade. Pressuring stronger expansion of soybean oil imports will be the steady increase in world output of its major competitor, palm oil.”
Soybean ending stocks for 2005/06 are forecast at 410 million bushels, the report noted, down 30 million from the level projected for 2004/05. At that level, stocks would be the second highest since 1985/86.
“Despite limited expansion in South American plantings, record global soybean stocks projected for the beginning of the 2005/06 marketing year will keep supplies large,” Norton said. “With large supplies and only moderate growth in global protein demand, the U.S. season average price of $4.50 is projected to be the lowest since 2001/02.”
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