A look at USDA’s long-range forecast
Brazil and Argentina capture most of the market growth. In contrast to the outlook for corn, the U.S. loses soybean market share to our primary competitors. Brazil makes the biggest gain in both exports and market share. Exports from Brazil increase by about 26 million tonnes over the decade (almost 1 billion bushels) while U.S. exports increase by about 1/10th as much. Exports from Argentina increase by a little more than 5 million tonnes (between 150 million and 200 million bushels). The U.S. share of world trade falls from near 40 percent to about 30 percent by 2022/23.
USDA predicts a 26 percent increase in the amount of soybean oil used for biodiesel. Food, seed and other domestic use holds about steady with current levels, suggesting a decline in per capita consumption. Soybean meal prices fall from around $470 per ton this year to $265 in mid-forecast, rising back to $283 in 2022/23. In contrast, soybean oil prices hold between 50 cents and 54 cents per pound throughout the forecast period.
U.S. soybean prices fall next year, according to the USDA long term forecast to $11.35 per bushel. Then, with ending stocks remaining around the 200 million bushel level through the rest of the forecast, prices stabilize mostly between $10 and $11 per bushel. The soybean to corn price ratio moves higher which could convince some farmers to plant more soybeans. However, there is no significant increase in acreage of either crop.
Exports are the key to the wheat sector outlook. U.S. wheat acreage has been generally trending down for decades. The key to the wheat sector outlook is exports, since exports account for about half of total demand and domestic use is generally very stable, rising at less than 1 percent per year. U.S. wheat exports decline from current levels, during the first half of the forecast and then stabilize at 940 million bushels. Exports in 2012/13 are currently put at 1.05 billion bushels. The trend USDA uses for wheat yields rises at about 0.7 percent per year so yield growth generally satisfies the growth in domestic food use. With exports forecast to decline, we probably have too many acres currently planted to wheat. USDA puts the 2013 wheat acreage at 57.5 million acres, up from 55.7 million in 2012.
Foreign competition is increasing significantly. The biggest problem for the U.S. wheat sector is the increasing competition, primarily from the countries of the former Soviet Union. Exports from Russia are forecast to increase by 10 million tonnes during the forecast (about 350 million bushels), exports from Ukraine rise by about 4.5 million tonnes and exports from other Former Soviet Union countries, primarily Kazakhstan, rise by about 4 million tonnes. With world trade increasing by a total of about 24 million tonnes, the Black Sea region picks up most of the market growth. According to the USDA forecast exports from the EU increase by about 7 million tonnes, after being essentially flat during the last 10 years. India stops exporting and becomes basically self-sufficient in wheat.
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