February 28, 2006

 

USDA forecasts record soy supplies, 18 percent jump in exports

 

 

Farmers in the southern states of the US are switching more acres to soybeans in 2006 due to this year's price hikes for fuel and nitrogen fertilizer, according to the USDA.

 

USDA is forecasting 2006 soybean plantings at 74 million acres, up nearly 2 million acres from 2005. Increased plantings and larger carry-over stocks are expected to bring more supplies and lower prices.

 

Yields have been setting records for the past two years, but with normal weather conditions, the 2006 yield is expected to return to normal levels of 40.7 bushels an acre.

 

After taking into account lower yields, USDA is projecting 2006 soybean production at 2.97 billion bushels. Soybean supplies for the 2006-07 marketing year are forecast to total a record 3.52 billion bushels as record carryover stocks add almost half a billion tonnes to supplies, Allen said.

 

US soybean exports could be up 18 percent to 1.075 billion bushels in 2006-07. With lower prices, record supplies and a weakened dollar, US soybeans are expected to be more competitive in 2006-07.

 

However, record South American soybean production in 2005-06 will compete fiercely with US soybean for export markets, said Allen.

 

Lower prices are expected to increase global consumption and stimulate trade in soybeans and soybean meal. China will continue to lead in global soybean imports with its huge crush capacity and soaring demand for protein meal.

 

Allen says abundant US soybean supplies in 2006-07 will help keep US processors competitive. However, increased meal exports from Argentina is expected to hamper demand for US soymeal exports.

 

US soymeal exports are projected at 6.5 million tonnes, unchanged from the 2005-06 forecast. Even though export volumes remained stable, it indicated that the US share of global soymeal exports is becoming smaller in an ever-expanding market, said Allen.

 

Soybean domestic use is projected to be up slightly from the estimate of 1.882 billion bushels for the current year. Lower prices and increased supplies are expected to encourage domestic use, according to analysts.

 

Soybean crush and domestic soymeal usage is projected to increase marginally as well.