PROJECTION FOR 2020/21

Global 2020/21 oilseed production is forecast at 609 million tons, down 1 million from August. Lower soybean and sunflowerseed production more than offset gains in peanut and rapeseed production. Soybean production in the United States is reduced 3 million tons on lower yield and together with a lower forecast output in Ukraine, offset production gains in Brazil, Canada and India. Lower production in Russia, Ukraine and Argentina leads declines in sunflower while greater rapeseed production in Canada and peanuts in India and the United States push these commodity forecasts higher. Oilseed trade is up 1 million tons to 190 million on higher soybean exports from Brazil and peanuts from India and the United States. Global ending stocks are down 1 million tons driven by reduced soybean carry-over and lower production in the United States. Protein meal and oil production, consumption, and trade are unchanged this month. The projected U.S. season-average farm price for soybeans is raised 90 cents to $9.25 per bushel in response to recent price strength, strong demand from China, adverse weather and concerns over Southern Hemisphere plantings, and expected tightening of near-term supplies.

PROJECTION FOR 2019/20

Global oilseed production is unchanged at 577 million tons. Oilseed imports are up 1 million tons to 188 million primarily on the inclusion of Belarus trade in the global totals. Exports are up 1 million tons on a larger soybean forecast for Argentina. Crush is mostly unchanged as increased global soybean and peanut crush offset reduced sunflowerseed crush. Ending stocks are up 1 million tons on higher rapeseed stocks in Canada and sunflowerseed in Argentina. Global meal trade is forecast down 1 million on reduced Argentina soybean meal exports. Oil trade is marginally higher on improving demand.

EXPORT PRICES

Export prices for soybeans and products for all major exporters continued to rise in August. U.S. Gulf FOB soybean export bids in August averaged $371/ton, up $8 from July. Argentina Up River FOB averaged $369/ton, up $10. Brazil Paranagua FOB prices remained high in August on tightening supplies, averaging $397/ton, up $19 from last month.

Meal prices built on late July momentum to further strengthen throughout August. U.S. soybean meal export bids averaged $346/ton, up $6 from July. Brazil and Argentina export soy meal prices outpaced the U.S. prices throughout the month of August, bringing what was a $14/ton premium for U.S. soy meal in July down to $4/ton and $9/ton respectively. Brazil Paranagua FOB averaged $342/ton, up $16 from July, and Argentina Up River FOB averaged $337/ton, up $12.

Rising oil prices persisted in August due to stronger demand for oils and slower crushing in Argentina. Brazil soy oil prices climbed $49 to $773/ton and the United States experienced a $63 jump to $771/ton. Argentina soybean oil prices rose modestly, up $37 to average $746/ton for the month, positioned at a $25/ton discount against the other major exporters. Palm oil prices continued to rally owing to strong soy oil prices offsetting a late August dip due to growing Malaysian stockpiles. Malaysia palm oil averaged $710/ton, $64 higher than July and Indonesia averaged $692/ton, up $62.

EXPORT SALES

For the final report ending September 3, 2020, 2019/20 accumulated U.S. soybean exports to China totaled 16.3 million tons and 28.7 million to the rest of the world. For 2020/21, soybean export commitments (outstanding sales plus accumulated exports) to China shot up to 15.9 million tons compared to 1.1 million the previous year. Total commitments to the world reached 29.4 million tons, compared to 9.5 million for the same period last year. Outstanding sales for the new marketing year (2020/21) are 15.5 million tons to China and 13.9 million to the rest of the world. Last year during the same time period, outstanding sales were paltry in comparison with 864,300 tons to China and 8.2 million to the rest of the world.

Belarus Expanded Crush Capacity Drives Soybean Imports

Investments in Belarus crushing and the development of new processing facilities have driven a sharp increase in soybean imports over the past 5 years. Imports were minimal prior to marketing year 2015/2016, when Belarus began developing its crushing sector. In the following 2 years, imports more than doubled annually, reaching 343,000 tons in 2017/18. Growth has continued at a pace of around 100,000 tons per year, and is expected to reach 540,000 in 2019/2020.

Belarus soymeal exports grew nearly ten-fold from 2016/2017 to 2017/2018 and are forecast to grow to 300,000 tons in 2020/2021. While meal imports are still stronger than exports, this difference is narrowing as livestock and poultry feed demands are increasingly met by domestic crushing. Soybean oil exports have grown even more dramatically, from 1,000 tons in 2015/2016 to 50,000 four years later. With production more than sufficient to meet domestic demand, soybean oil imports are expected to cease this year.

Belarus has sourced soybeans nearly exclusively from its Black Sea neighbors. While Ukraine had long been the origin of its imports, Russia began to export soybeans to Belarus in spring 2018, but remained a secondary supplier. Russia’s record soybean crop in 2019/2020 caused prices to decline, initiating a flurry of exports. In April 2020, a greater share of soybean imports was sourced from Russia than Ukraine. While this trend towards Russian supply was initiated by market conditions, it was cemented by a Eurasian Economic Commission decision to ban exports of soybeans and other food products to countries outside of the Eurasian Economic Union, of which Russia and Belarus (but not Ukraine) are members. Ostensibly to prevent the risk of a pandemic-induced food shortage, this decision restricted the exports of Russia soybeans to major markets from April through June 2020. Although this ban was not fully enforced, reduced competition provided Belarus crushers priority access to Russia’s competitively priced supply. With lower exportable supplies available from both Russia and Ukraine in 2020/2021, the rapid growth in crush is expected to halt, falling slightly to 520,000 tons. However, if crushers broaden their supply chain to include new origins, then additional growth is possible.