March 15, 2005

 

Lower US soy prices will boost exports

 

 

The USDA's soybean outlook for the 2005-06 marketing year is that prices are expected to be lower - an average $4.50 per bushel, significantly below last year, and the lowest since 2001-02.

 

On the flip side, such decreased prices and an expected continuing slide in the value of the US dollar are projected to boost soybean exports.

 

"The outlook for US exports throughout the soybean complex looks better than in recent years," said Jerry Norton, agricultural economist for the Farm Services Agency, who presented the forecast at the annual USDA Agricultural Outlook Forum 2005.

 

The report was prepared by members of the agency's Wheat, Feed Grains, and Oilseeds Interagency Commodity Estimates Committees.

 

Soybean exports are expected to grow by 5 percent to 1.06 billion bushels for the marketing year, Norton said.

 

"This increase would interrupt the long-term decline in the US market share of world soybean exports. Unlike last fall, there should be few reasons for producers to delay marketing, so the 2005-06 export pace is expected to strengthen quickly."

 

South American producers are expected to see the falling price trend and rising production costs as a signal to suspend their 10-year-long expansion, he said.

 

Despite slowing production growth, record large South American soybean stocks this year will boost 2005-06 supplies, but at a reduced rate. Oilseed producers in other countries, such as Canada, Australia, and India, are expected to scale back planted area from 2004 due to lower oilseed prices. With world output growth slowing, US supplies are expected to be more competitive in world markets.

 

Lower world prices will also stimulate consumption in trade in soybeans and soybean meal, the report noted.

 

China, with its ample crushing capacity and robust consumption of protein meal and vegetable oil, is expected to continue to dominate the growth of global soybean imports.

 

Growth potential in other Asian markets will likely be limited by the continuing effect of avian influenza (bird flu), the report said. Only modest consumption gains are seen for the European Union, a market that still accounts for nearly half of world soybean meal trade and one-fourth of world soybean trade.

 

Abundant US soybean supplies will make domestic processors more competitive in foreign markets, Norton said.

 

US soybean meal exports are projected to increase by 12 percent in 2005-06, to 6.4 million short tonnes. At that level, US share of global soybean meal exports would register a slight improvement from 2004-05.

 

Soybean ending stocks for 2005-06 are forecast at 410 million bushels, the report noted, down 30 million from the level projected for 2004-05.  At that level, stocks would be the second highest since 1985-86.

 

Despite limited expansion in South American plantings, record global soybean stocks projected for the beginning of the 2005-06 marketing year will keep supplies large, Norton said. Together with a moderate growth in global protein demand, the US season average price of $4.50 is projected to be the lowest since 2001-02.