Jeff Frank was impacted by the derecho that slammed Iowa on August 10 and lingering drought conditions. Those two events contributed to a 1.5% yield reduction in the latest WASDE report. (Photo: Joseph L. Murphy/Iowa Soybean Association)
Soy crunch: USDA further reduces stocks in Jan. report
January 14, 2021 | Bethany Baratta
Lower forecasted supplies and increased soybean use boosted soybean prices this week, reflecting reports from the USDA and World Outlook Board.
Soybean prices hit $14.27 per bushel Tuesday after the release of the grain stocks, World Agricultural Supply and Demand Estimates (WASDE) and crop production reports.
A webinar hosted by the U.S. Soybean Export Council (USSEC) noted the market-moving changes reflected in the reports.
The USDA adjusted lower the 2020 U.S. soybean crop size, shaving off a half a bushel per acre, or 35 million bushels. U.S. farmers produced 4.14 billion bushels of soybeans in 2020, up 16% from 2019 and the fourth largest in history. The 2020 Iowa soybean crop yielded 493.96 million bushels, down 1.5% from 2019 due largely to the Aug. 10 derecho and the lingering drought in some areas of the state.
The downward revision to soybean production came as no surprise to Iowa Soybean Association (ISA) At-Large Director Jeff Frank of Auburn. The derecho had larger impacts on farms and fields near his, Frank said.
“We had hail, but not the big winds,” said Frank, who is the chair of ISA’s supply committee. “We had below-average production more so because of the dry conditions than the derecho. I was about 20% below average on corn and about 10% below on soybeans.”
The downward revision in soybean supplies further squeezed ending stocks to 140 million bushels, down 35 million bushels from the previous forecast.
The soybean crush forecast for the 2020/2021 crop marketing year was raised 5 million bushels to 2.2 billion, reflecting improved prospects for U.S. soybean meal exports and a lower export forecast for Argentina.
The soybean export forecast was raised 30 million bushels to a record 2.23 billion bushels, which came as no surprise to USSEC Vice President of Market Intelligence Mac Marshall given the “exceptionally robust” pace of U.S. soy exports, Marshall said.
The USDA’s soybean export estimate was the highest since November 2017, Marshall noted. The USDA projects Chinese soybean imports to be a record 100 million metric tons (3.67 billion bushels) this marketing year.
Based on the January. WASDE estimates demand for marketing year 2020-2021 at 369.8 million metric tons (13.58 billion bushels), world demand is up 15.3 million metric tons, outpacing the 10-year trend of 11.5 million metric tons per year. Excluding the United States, soy demand is up 13.7 million metric tons year over year, outpacing the 10-year trend of 10.4 million metric tons per year, Marshall noted.
Positive news for farmers
Strong demand for soybeans and soybean meal as supplies tighten bodes well for soybean farmers, says Grant Kimberley, senior director of market development for the Iowa Soybean Association (ISA).
“It looks like the world needs all the beans that can be produced over the next year or so,” Kimberley said.
Iowa soybean growers are positioned to deliver the soybeans the world needs, Frank said.
“As farmers, we’re striving to raise more beans, so we need to have as many export partners we can get,” he said. “We need to keep China but also create new markets for our beans.”
The U.S. season average soybean price for 2020/21 is projected at $11.15 per bushel, up 60 cents from last month’s forecast.