April 13, 2004



US Soybean Exports Set To Decline

US soybean exports have declined in the first six months of the 2003-2004 marketing year as a result of severe crop reduction due to drought, according to Iowa State University agricultural economist Robert Wisner.


As of April 1, U.S. soybean exports were down 9 percent from last year's sales. However, soybean exports are still running above USDA projections. The USDA forecasts that U.S. soybean exports will decline 14 percent during the 2003-2004 marketing year compared to the previous year.


The limited soybean supplies have had the largest impact on U.S. soyoil exports, which are down 68 percent during the first six months of the 2003-2004 marketing year compared to last year.


"So we've seen rationing in the export market for U.S. beans and bean products," Wisner said. "Not quite enough to match up with our limited supply of soybeans, but we're getting closer, much closer, in the soybean export rationing process."


U.S. soybean exports to China, the top international buyer, have slowed since peaking earlier in the marketing year. From September 2003 to November 2003, U.S. soybean exports to China rose 107 percent from a year earlier. But as of April 1, U.S. soybean exports to China were just 9 percent above last year's levels.


"The export sales report indicates China has shipped out all of the soybeans it has purchased from us so far this marketing year," Wisner said.


Now, the major driving force in the U.S. soybean market is domestic soy crushing, not export sales.


"The domestic crush has not been cut back so far this season and is running about the same as a year ago," he said. "We're going to be running out of soybeans this summer, at least if the crush stays at the same rate versus a year ago."


Soy crushing margins are so favorable right now that there is little incentive for plants to cut back on production.


The gross crushing margin in central Illinois averaged 81 cents per bushel on April 1, up from 37 cents per bushel a year earlier, according to the USDA's Agricultural Marketing Service.


"The market is faced with the challenge of how to slow that domestic crush, and that will come about probably through a combination of strong soybean basis, higher soybean futures relative to soybean oil and meal futures," Wisner said.


The United States will likely import a sizeable amount of soybean meal in late summer and early fall from South America to make up for domestic shortfalls.