Return to Normal Production Sends Argentina’s Crush Higher
Crush volume in Argentina continues to trend higher in 2019 as soybean production returns to normal following last year’s drought. Crush volume is currently running 24 percent above last year’s pace and is projected to be the second-largest local marketing year (April/March) volume on record. The crush forecast is projected to reach 43.1 million tons, 18 percent above last year, with a further increase expected in 2020/21 to 44 million tons. Export demand for soybean meal and oil remains strong with rising meal demand in Iran and oil demand in China and India helping to propel higher crush. However, slowing exports of biodiesel and uncertainty regarding future government policy continue to weigh on the forecast.
With the higher crush, exports of soybean meal and oil are also projected to rise. Soybean meal exports are forecast to rise 12 percent from last year to 29 million tons while soybean oil is forecast to reach 5.7 million tons, 24 percent above the previous year. However, biodiesel exports are trending to their lowest level since 2015, the last time exports fell below 1.0 million tons. Biodiesel exports are constrained by limits on trade to the European Union and high duties on exports to the United States.
PROJECTION FOR 2019/20
Global 2019/20 oilseed production is forecast at 574.8 million tons, down 4.6 million tons from September due to lower soybean, sunflowerseed, and rapeseed production. Soybean production is projected at 339.0 million tons, down 2.4 million to a 4-year low. Sunflowerseed production is forecast at 51.4 million tons, dropping 1.2 millions tons from September reflecting reduced production in Ukraine and the European Union. Rapeseed production is reduced nearly 1.0 million to 68.6 million tons in response to a 600,000-ton cut in Canada and declines in Australia, the European Union, and the United States. Oilseed imports are down 500,000 tons due to small declines in most oilseeds. Oilseed exports are nearly unchanged from last month. Ending stocks are reduced 4.6 million tons from the September forecast mostly on lower soybean production in the United States. Protein meal imports are down 580,000 from last month primarily on reduced soybean meal imports. Vegetable oil trade continues to increase on growing demand in China and India. The projected U.S. seasonaverage farm price for soybeans is up $0.50 from last month to $9.00 per bushel in response to a tightening supply situation.
OVERVIEW FOR 2018/19
Global 2018/19 oilseed production is down 3.3 million to 597.4 million tons this month due to a 3.1 million reduction in U.S. soybeans and a smaller decrease in Paraguay soybeans. Oilseed exports are up marginally. Oilseed imports are down 650,000 tons due to reductions in soybean, rapeseed, peanut, and cottonseed imports. Ending stocks are down 2.4 million to 128.2 million tons on smaller stocks for soybeans and sunflowerseed, partially offset by higher stocks for rapeseed. Protein meal trade remains nearly unchanged as higher soybean meal exports are balanced by lower sunflowerseed meal. Vegetable oil trade is up nearly 1 million tons with higher exports of palm, sunflowerseed, and soybean oils. China palm oil imports are up 600,000 tons due to increased demand and trade pace. The U.S. season-average farm price for soybeans is down $0.02 from last month to $8.48 per bushel.
EXPORT PRICES
U.S. soybean export bids in September (FOB Gulf) averaged $336/ton, down $1 from August. Brazil Paranagua averaged $362/ton, down $2 from August. Argentina Up River FOB averaged $348/ton, up $1 from last month. U.S. soybean meal export bids (FOB Gulf) in September averaged $330/ton, down $4 from August. Brazil Paranagua FOB averaged $304/ton, down $4 from August, and Argentina Up River FOB averaged $299/ton, down $6 from the previous month. U.S. Gulf soybean prices have declined since mid-July on improving crop prospects but have risen 5 percent since late September on China sales and lower September 1 stocks reported by NASS. Brazil soybean prices are averaging 8 percent above U.S prices.
EXPORT SALES
For the report ending October 3, 2019, U.S. soybean accumulated exports (shipments) to China totaled 896,000 tons and 3.1 million to the rest of the world. Outstanding sales were 3.9 million tons to China and 8.5 million to the rest of the world. Last year at this time, accumulated exports to China were 67,000 tons and 3.8 million tons to the rest of the world, and outstanding sales to China were 1.0 million tons and 15.6 million tons to the rest of the world. U.S. soybean export commitments (outstanding sales plus accumulated exports) to China totaled 4.8 million tons compared to 1.0 million tons a year ago. Total commitments to the world were 16.4 million tons, compared to 20.5 million for the same period last year.