Have small U.S. soybean supplies finally been rationed?
Smaller than expected U.S. soybean crops in 2011 and 2012 resulted in the need to limit consumption of U.S. soybeans during the 2011-12 and 2012-13 marketing years. After reaching a peak of 3.361 billion bushels in the 2009-10 marketing year, consumption declined to 3.155 billion bushels last year and is limited to about 3.085 billion bushels this year. A rebound in South American soybean production in 2013 has helped reduce the demand for U.S. soybeans, but prices also increased to record highs in order to ration those smaller supplies, according to University of Illinois agricultural economist Darrel Good.
“Year-ending stocks of U.S. soybeans are expected to be at a minimum pipeline level of 125 million bushels, which represents about 4 percent of marketing year consumption,” Good said. “The USDA has projected stocks at that level in the monthly World Agricultural Supply and Demand Estimates (WASDE) reports since February this year. The task of the market this year has been to monitor the rate of soybean consumption to determine if the pace has slowed sufficiently to maintain minimum pipeline stocks at year end. Prices have traded in a fairly wide range as evidence about the actual and likely pace of consumption has varied. After peaking near $18 in August, for example, the average spot-cash price of soybeans in central Illinois traded under $14 in January and again in April. That average is now near $15.30. With only about 10 weeks left in the marketing year, the uncertainty about rationing persists,” he said.
In the June 12 WASDE report, the USDA projected marketing-year exports of U.S. soybeans at 1.33 billion bushels. That projection has only varied by 20 million bushels since November 2012, Good said. Through June 20, 2013, the USDA’s weekly export inspections report indicated cumulative marketing-year export inspections of 1.282 billion bushels. The Census Bureau estimate of cumulative marketing-year exports through April was about 3 million bushels larger than the cumulative export inspection estimate.
“If that margin has been maintained, exports during the remaining 72 days of the marketing year need to total 45 million bushels (4.4 million bushels per week) in order for the marketing-year total to reach the USDA projection,” Good said. “Inspections averaged 4.2 million bushels per week during the seven weeks that ended June 20. As of June 13, the USDA reported unshipped export sales for the current marketing year of 59 million bushels. Some additional sales will be made, some sales may be cancelled, and some sales may be shifted to the 2013-14 marketing year, but it appears that exports for the year will be very close to the current USDA projection.
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