Early-Season U.S. Soybean Meal Sales Surge

U.S. soybean meal export commitments (accumulated exports plus outstanding sales) reached a new record in the first month of the 2014/15 marketing year. By the end of October, commitments were 25 percent higher than last year and on track to blow past last year's record exports. Total exports are forecast at 11.6 million tons in this year.

Although October exports were slightly below last year due to limited on-site processor soybean stocks that reduced initial crush volume, outstanding sales were a third higher. Lower soybean meal prices, down nearly 20 percent from last year, have spurred additional sales, particularly to Southeast Asia and Mexico. Expected weak Indian meal exports and limited crush expansion in Argentina due to slower producer selling are also boosting U.S. sales.

Higher Transport Costs Add to Producer's Concerns

In early October, cash soybean prices in Central Illinois hovered near $325 per ton ($8.85/bu), a whopping 30 percent below last year. While current price levels have improved with a pick-up in demand, they still remain close to 20 percent below a year ago. Despite better yields and added acres this year, producers are expecting reduced revenues due to the lower prices.

While a larger supply situation has been the primary factor in this year's lower farmgate prices, higher transportation costs are contributing as well. The price spread between the Gulf prices and those at the local elevator is largely a measure of the shipping costs between the producer and the terminal market.

Typically, in a buyers' market, as is the case this year, producers must absorb a greater share of transport and logistical expenses in order to remain competitive, adding to the lower farm-gate prices. The current price spread, while initially nearly 40 percent larger than last year, has narrowed in recent weeks, yet remains significantly above last year and close to double the levels in 2011 and 2012 when production and shipping volumes were lower. This year's record corn and soybean production has taxed limited barge and rail capacity, pushing rates higher. Additionally, an improving economy and growing demand for rail has contributed to the higher transport costs.

OVERVIEW

Global soybean production is higher on larger crops in the United States. Soybean trade is up slightly on U.S. exports. Soybean meal trade is virtually unchanged as larger U.S. exports are mostly offset by lower Argentine exports. The U.S. season-average farm price is unchanged.

SOYBEAN PRICES

U.S. export bids, FOB Gulf, in October averaged $416 per ton, down $8 from last month, pressured by this year's record crop.

As of the week ending October 30, 2014/15 U.S. soybean commitments (outstanding sales plus accumulated exports) to China totaled 22.2 million tons compared to 21.1 million a year ago. Total commitments to the world are 35.6 million tons, compared to 33.2 million for the same period last year.

2014/15 TRADE OUTLOOK

United States soybean exports are up 545,000 tons to 46.8 million and soybean meal exports are up 726,000 tons to 11.6 million.

Argentinasoybean exports are cut 300,000 tons to 8.2 million and soybean meal exports are cut 1.0 million tons to 27.8 million in expectation of lower producer sales.

Canadarapeseed exports are raised 300,000 tons to 8.3 million to reflect increased trade with China.

China

o Fish meal imports are raised 100,000 tons to 1.2 million in response to larger global supplies.

o Rapeseed imports increased 300,000 tons to 3.5 million on forecast stronger crush.

o Palm oil imports are cut 300,000 tons to 6.3 million on slowing consumption growth.

European Union

o Rapeseed imports are cut 200,000 tons to 2.4 million as higher domestic production reduces import demand.

o Sunflowerseed oil imports are down 100,000 tons to 850,000 on increased domestic production and reduced exporter supplies.

India

o Sunflowerseed oil imports are down 100,000 tons to 1.5 million while soybean oil imports are up 150,000 tons to 1.9 million, reflecting more competitive soybean oil prices.

Perufish meal exports are up 100,000 tons to 1.2 million on larger supplies and strong exports to China.

Russiasunflowerseed oil exports are cut 100,000 tons to 1.5 million and sunflowerseed meal exports are down 125,000 tons to 1.5 million on smaller exportable supplies.

Saudi Arabiasoybean meal imports are up 195,000 tons to 725,000 on growing demand and higher 2013/14 trade.

South Korea

o Soybean imports are up 120,000 tons to 1.3 million on higher crush.

o Soybean meal imports are raised 100,000 tons to 1.9 million and rapeseed meal imports are up 100,000 tons to 530,000 on sustained growth in protein meal demand.

Thailandsoybean imports are lowered 100,000 tons to 2.0 million and soybean meal imports are cut 200,000 tons to 2.9 million to reflect slower growth in protein meal demand.

Turkeysoybean imports increased 200,000 tons to 1.5 million on growing demand.

United Arab Emiratessoybean meal imports are cut 155,000 tons to 200,000 on an expected continuation of weak imports.

Ukrainesoybean exports are raised 100,000 tons to 1.7 million on stronger demand.

2013/14 TRADE CHANGES – based on trade data

Argentina

o Soybean exports are down 659,000 tons to 7.8 million.

o Soybean meal exports are cut 240,000 tons to 25.0 million

China

o Soybean imports are up 1.4 million tons to 70.4 million.

o Soybean oil imports are up 103,000 tons to 1.4 million.

o Rapeseed imports are up 346,000 tons to 5.0 million.

o Rapeseed oil imports are down 148,000 tons to 900,000.

o Palm oil imports are down 727,000 tons to 5.6 million.

o Fish meal imports are up 180,000 tons to 1.3 million.

Egyptsoybean imports are cut 126,000 tons to 1.7 million and soybean oil imports are down 112,000 tons to 210,000, while soybean meal imports are up 166,000 tons to 1.1 million.

EUsoybean meal imports are down 350,000 tons to 18.4 million and soybean imports are up 300,000 tons to 13.0 million.

India soybean oil imports are up 180,000 tons to 1.9 million.

Indonesiasoybean imports are down 100,000 tons to 2.0 million.

Iran soybean meal imports are up 183,000 tons to 2.7 million.

Mexico soybean imports are down 150,000 tons to 3.7 million.

Perufish meal exports are up 280,000 tons to 1.2 million.

Philippinescoconut oil exports are cut 150,000 tons to 650,000.

Saudi Arabia soybean meal imports are up 198,000 tons to 700,000.

South Korea soybean imports are up 141,000 tons to 1.3 million.

Taiwansoybean imports are up 100,000 tons to 2.4 million.

Thailand

o Soybean meal imports are up 235,000 tons to 2.7 million, while palm oil exports are cut 150,000 tons to 400,000.

o Soybean imports are down 132,000 tons to 1.8 million.

Turkeysoybean imports are up 108,000 tons to 1.6 million.

United Arab Emirates soybean meal imports are down 207,000 tons to 110,000