Oilseeds. World Markets and Trade. June 2018 - USDA 六月 13, 2018
U.S. Soybeans Facing Stiff Competition from Brazil
Another record Brazilian soybean crop, currently estimated at 119 million tons, will provide ample supplies for export in 2018. Adding to the competitive pressure is the recent weakening of the real relative to the dollar as political and economic uncertainty has helped drive it to near 3.8 to the dollar. This is nearly 20 percent below the level in January 2018 and approaching the near-term record low of 4.04 observed in January 2016. With elections in Brazil scheduled for October, the same forces pushing the real lower today are likely to persist through at least the U.S. harvest if not through the latter half of 2018.
Weak currencies generally augment pricing power in the market providing producers more flexibility to undercut competitor prices and to increase sales. While the recent decline in the real adds to this pricing power, it is an issue that has dogged U.S. producers since the early part of this decade. While average Brazilian export prices, in dollars, have declined roughly 20 percent since 2011, prices in reals have nearly doubled from 800 to over 1,500 reals per metric ton. These high prices and market power have helped Brazil sell out most of each year’s crop over the past 5 years. While short crops and strong global demand in the early part of the decade helped all exporters draw down stocks, the large crops of the past few years have led to stock building, much of it occurring in the United States.
Since 2014/15 when stocks in both Brazil and the United States reached minimum levels, Brazilian stocks have remained relatively unchanged while stocks in the United States, as a percent of supplies, are projected to rise to 11 percent in the coming year. The high prices in reals have provided Brazilian producers the flexibility to undercut U.S. prices and have encouraged continued acreage expansion, all factors contributing to Brazil’s rising global market share. As long as U.S. producers continue to battle against a weak real, this trend will likely continue.
Despite the prospect of Brazil clearing out the 2018 crop this year, limited yearover-year growth in Brazil’s soybean production, rising global demand, and smaller supplies in Argentina and Uruguay following this year’s drought should sharply curtail exportable supplies in the latter half of 2018. Despite a weak real, this should reduce competition in the global soybean market, boosting U.S. exports in 2018/19.
China: a New Player on the Sunflowerseed Meal Market
Historically, global sunflowerseed meal consumption has been dominated by the leading sunflowerseed producers and processors, such as the European Union, Russia, Ukraine, and Turkey. However, other countries have recently emerged as growing users.
In 2017/18, China became a significant sunflowerseed meal importer after its Ministry of Agriculture and AQSIQ (General Administration of Quality Supervision, Inspection, and Quarantine) signed sanitary and phytosanitary protocols and requirements for sunflowerseed meal imports from Ukraine.
In 2017/18, China is forecast to import 150,000 tons of sunflowerseed meal and this is likely to continue into the 2018/19 marketing year, as China’s demand for protein feedstuffs continues to grow. In 2018/19, global sunflowerseed meal imports are projected to grow to 7.6 million tons, on strong demand in the European Union, but also driven by continuing demand in emerging markets such as India, Pakistan, and China.
Many countries view sunflowerseed meal as a very nutritious animal feed, often preferred over soybean meal due to its non-biotech origin. However, due to limited production and constraints to expansion, the sunflowerseed meal market is likely to remain considerably smaller than rapeseed meal and soybean meal.
Global oilseed production is forecast slightly higher this month at 594.0 million tons. Soybean production is projected up at 355.2 million tons as gains in Brazil more than offset reductions for Ukraine. The rapeseed crop forecast is lowered this month as reductions in the European Union exceed gains for Russia. Sunflowerseed production in Argentina is projected higher while the cottonseed forecast for China is lowered. Soybean imports are down marginally this month, driven by a reduction for Brazil. Exports are raised slightly on projected growth in Brazil’s exportable supplies. Global stocks are up this month on larger supplies in Brazil which more than offset reductions for Argentina. The U.S. season-average farm price for soybeans is projected unchanged at $10.00 per bushel.
Global oilseed production is unchanged this month at 572.9 million tons. A larger soybean production estimate for Brazil fully offsets a reduction for Argentina. Global soybean imports are up this month on larger shipments to Argentina. Exports are up on gains for Brazil, Russia, and Ukraine which more than offset a lower forecast for Argentina. Global soybean ending stocks are raised significantly this month, primarily reflecting the larger harvest in Brazil. The U.S. seasonaverage farm price for soybeans is up 5 cents to $9.40 per bushel.
U.S. export bids in May, FOB Gulf, averaged $406/ton, down $11 from April. In comparison, FOB Brazil Paranagua averaged $406/ton, down $24/ton from last month. FOB Argentina Up River averaged $415/ton, down $6 from last month. Prices have fallen in response to a weakening in the Brazilian real, rising soybean supplies in South America, and good crop prospects in the United States.
For the week ending May 31, U.S. 2017/18 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 28.7 million tons compared to 35.9 million a year ago. Total commitments to the world are 55.6 million tons, compared to 58.6 million for the same period last year.