Bullish Signal: USDA cuts soybean stocks

May 15, 2025 | Kriss Nelson

Soybean producers have reason to be cautiously optimistic as the U.S. Department of Agriculture’s (USDA) May World Agricultural Supply and Demand Estimates (WASDE) reports rising demand and tighter ending stocks.

“The big news is we got our first official look at what the USDA predicts is coming for the 2025/2026 season in terms of production and ending stocks,” says Matthew Kruse, president of CommStock Investments.

According to the recent WASDE report, the 2025/26 outlook for U.S. soybeans shows lower ending stocks due to higher crush and increased exports compared to 2024/25.

The soybean crop is projected to remain almost the same as last year, at 4.34 billion bushels, with a higher yield but reduced area. With higher beginning stocks offset by increased demand, soybean supplies are seen down nearly 15% from 2024/25.

U.S. soybean ending stocks for 2025/26 are projected at 295 million bushels, down 55 million from the revised 2024/25 forecast. The 2025/26 U.S. season-average soybean price is forecast at $10.25 per bushel, compared with $9.95 per bushel in 2024/25. The soybean meal price is forecast at $310 per short ton, up $10. The soybean oil price is forecast at 46 cents per pound, up 1 cent from the prior year.

“Ending stocks of 295 million bushels next year are the lowest ending stocks we have had in the last three years,” says Kruse. “The production estimate of 4.3 billion bushels is about what the U.S. produced last year, but the big difference is we continue to see our exports increase, so that is why you are seeing the reduction in the ending stock forecast.”

Increased exports

The USDA projects global soybean exports for 2025/26 are expected to increase 4% to 188.4 million tons from 2024/25. Exports of major South American soybean-producing countries (Brazil, Argentina, Paraguay and Uruguay) are expected to rise 8.5 million tons, more than offsetting lower U.S. exports.

Global imports are increased for Argentina on higher supplies in neighboring countries and in China, Egypt, Pakistan, Bangladesh, Vietnam, Mexico and Algeria.

Soybean imports for China are up 4 million tons from the revised 2024/25 import forecast at 112 million. Global ending stocks are up 1.2 million tons to 124.3 million, mainly on higher stocks for Brazil and Argentina, partly offset by lower U.S. stocks.

“The USDA is still looking for stronger exports despite all of the tariff issues,” says Kruse. Chinese imports for next year have been increased to 112 million metric tons. If you had told me last week that would happen, I would have said no way.”

 The China factor

According to the White House, the U.S. will reduce reciprocal tariffs on Chinese goods to 10%, which, combined with a 20% duty on China regarding fentanyl, places Chinese imports at a minimum rate of 30%. China, in return, reduced its retaliatory tariffs on U.S. goods to 10% and agrees to remove any non-tariff trade barriers and restrictions imposed on U.S. products following April 2 when President Trump announced his reciprocal tariff plan.

“I think the U.S. needs to enforce the Phase One trade agreement. I think we would see some major soybean purchases,” says Kruse. “It looks like China wants to maintain a trade relationship with the United States, and a good place to start is for them to buy more grain from us.”

Experts at the Executive Agribusiness Risk Summit held in Des Moines earlier this week agree the U.S. agricultural industry needs to diversify its market beyond China.

“We’re at peak China in terms of their trade with the U.S.,” says Kenneth Scott Zuckerberg, director of market research for CHS. “They will never be as big a trading partner again as they were.”

Dr. Chad Hart, professor of economics at Iowa State University, says 96% of potential customers for agricultural products live outside of the United States. Because of this, the U.S. farming industry cannot rely solely on domestic buyers for growth.

“We’ve long looked for the big nuggets, so we’re going to have to look at adjusting our approach to markets,” says Hart. “India is a good example. It’s a big nugget, but you’ll have to work at it in pieces. We have to develop markets and work with them.”

To compete with Brazil, Hart advises U.S. Midwest soybean and hog producers to improve the value of their products.

“The bulk commodity built American and U.S agriculture,” says Hart. “The growth potential is value-added products. That’s the feature that will allow us to grow in the future. We have become reliant on just one country – China, from 1990 to 2000, like we did with Russia in the 1970s and 80s.”

To avoid that risk, Hart says the U.S. should focus on selling high-value agricultural products to a broader range of countries like Colombia, Malaysia, and South Korea.

The market’s response

Soybean markets reacted positively to the WASDE report and the temporary halt and tariff reduction with China.

Soybeans jumped 27 cents, while corn had a more modest response, only up 3 1/2 cents.

“The jump in soybean prices on Monday completely changes the chart scenario, at least that is my opinion for soybeans,” he says. “I could see soybeans going up to the $10.75 a bushel level for the new crop, and if we’re lucky, back to the $11, and hopefully we can continue to rally and maintain those levels.”

 Marketing strategy

Although soybean demand remains strong, Kruse reminds farmers that demand is seasonal.

“As Brazil’s soybean crop is exported in the first six months of the year, peaking in the April/May timeframe, that will weigh on prices,” he says. “Looking at current basis levels, it appears most end users have their summer needs covered, which limits near-term marketing opportunities.”

Without a major weather disruption, Kruse expects the soybean market to mirror last year with a brief rally now followed by a drift lower into August before any potential rebound.

“For those behind on new-crop sales, we still advise taking protective action,” he says. “We’ve been recommending short-dated put options as a cost-effective way to get started. Some longer-dated December puts are more expensive and may not be practical for all producers.”

 Weather impact

Kruse points out it is still early in the growing season and the crop isn’t under significant moisture stress.

“Critical weather-related risks could emerge later, particularly in July and August when pollination occurs and moisture demands peak,” he says.

Written by Kriss Nelson

Aaron Putze, APR, Iowa Soybean Association’s chief officer brand management and engagement contributed to this story.

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