April 13, 2004

USDA: Global 2004 Soybean Stocks Fall Amid Higher Consumption

World 2004 soybean stocks are expected to fall amid an increase in consumption, the U.S. Department of Agriculture said Friday in its "Oilseeds: World Markets and Trade" report.
 
Global soybean crush is projected to increase by 7.2 million tons in 2003/04 despite lower soybean production. Through the first half of the marketing year the U.S. has continued to crush and export soybeans at near last year's level, even with its drought-reduced crop, the report said. U.S. exports and crush will fall dramatically during the second half of the marketing year as soybean supplies are exhausted and U.S. ending stocks are reduced to the lowest level since 1977.
 
While South American soybean production is still at record levels, recent weather and disease problems have reduced projected end of September stocks. In addition, the lack of competition from the U.S. will draw South American soybean and meal supplies into the market more rapidly than normal this summer, further reducing South America's end of September stock levels. As a result, South American exports and crush in the October-March 2004/05 period are projected to be lower than they were this year.
 
The reduced availability of South American soybeans and products will force greater reliance on U.S. supplies this fall, the report said. This is illustrated by the fact that U.S. soybean export sales for delivery after Sept. 1 are nearly six times the level they were at this point two years ago.
 
SUMMARY
 
World soybean supplies are forecast to be tighter in 2003/04 compared to last month's estimate as total oilseed production was reduced to 338.3 million tons in April. Forecast global soybean production was reduced 5.5 million tons to 193.4 million tons. This is below the level reached in 2002/03 and is responsible, along with strong demand, for the higher soybean prices currently being experienced.
 
Brazil's 2003/04 soybean production forecast was reduced 3.5 million tons to 56.0 million tons this month. While higher than last season's 52.5 million tons, dry weather led to reduced yields in many production areas this year. Declines were also noted for Argentina, down 1.5 million tons to 35.0 million tons, and Paraguay, down 500,000 tons to 4.0 million tons.
 
Due to lower supplies, both soybean export and crush forecasts were reduced this month. World soybean export volume is now expected to barely exceed the 2002/03 level at 62.7 million tons, 2.2 million tons below last month's forecast. Crush was also lowered 2.1 million tons this month to 172.9 million tons. This is still a healthy increase over 2002/03 and reflects increased crush in South America and China. Soybean crush in Europe is expected to remain flat in 2003/04, while U.S. crush is expected to decline nearly 4.0 million tons due to the reduced 2003 harvest. Soybean stocks will also be lower in 2003/04 due to the decline in soybean production. Stocks are forecast to reach 33.0 million tons this year, down 2.9 million tons from the March forecast. Changes in April for other oilseeds were much smaller relative to soybeans.
 
Canada's rapeseed export forecast was reduced 100,000 tons with a compensating increase in crush for 2003/04. The European rapeseed ending stock forecast for 2003/04 was also increased based on historical revisions in trade.
 
For sunflowerseed, increased Argentine production, up 200,000 tons to 3.2 million tons in 2003/04, was distributed equally among exports and crush. This partially offset a 400,000-ton decline in Russia's sunflowerseed export forecast for the current year. Much of the Russian sunflowerseed was destined for the European Union and required a compensating 400,000-ton decline in expected European imports, and a corresponding reduction in crush for 2003/04.
 
The global meal production forecast for April was reduced 2.2 million tons to 197.4 million tons due to a significant decline in soybean crush this month. In addition to the lower soybean meal production, down 1.7 million tons, production forecasts for cottonseed, rapeseed, fish and peanut meal were also lowered in April. Despite the lower crush, forecast trade in oilseed meals was increased nearly 100,000 tons due to increased palm kernel meal exports, the report said.
 
The soybean, cottonseed, and rapeseed meal trade forecasts were all reduced in April, while increases in sunflowerseed, fish, and peanut meal helped push global trade higher. The global vegetable oil production forecast increased 194,000 tons in April as higher rapeseed, sunflowerseed, and peanut oil output more than offset reduced soybean oil production.
 
Adjustments made to Indian oilseed extraction rates helped boost output of rapeseed, sunflowerseed, and peanut oil, as did increased crush of Canadian rapeseed and Russian sunflowerseed.
 
Forecast 2003/04 vegetable oil trade was also increased this month in response to increased palm oil exports, most notably by Indonesia. With the increase in vegetable oil production, there was a corresponding increase in both consumption and ending stock forecasts in April. Forecast global vegetable oil consumption was increased 366,000 tons to 100.6 million tons while the global 2003/04 ending stocks forecast rose nearly 200,000 tons to 6.4 million tons.