Thanks to production issues in Argentina, U.S. soybean producers are experiencing higher soybean crush levels when compared to recent years. USDA projects domestic crush is up 3.6% from this past marketing year. Additionally, the second half of this year could be even greater at 3.7% higher than last year.
The U.S. Census Bureau estimates March 2018 crush at 182.2 million bu.—13% greater than March 2017. Improved crush margin is incentivizing greater crush in the U.S. Since Argentina is facing poor soybean production—down 654 million bu. from last year according to Todd Hubbs at the University of Illinois—there could be increased need for domestic soybean crush.
Soybean oil prices, on the other hand, are weaker as stocks grew 0.8% compared to March of last year. Oil prices decreased from 31.6 cents per pound in early February to 29.5 cents per pound over last month in Decatur, Ill., Hubbs says. Crush strength is heavily dependent on soybean meal markets—which are growing rapidly because of Argentina’s production problems.
“Soybean meal use needs to continue to build on recent progress to meet or exceed the current crust projection,” Hubbs adds.
April’s WASDE report increased domestic soybean meal consumption by 250,000 tons and exports by 100,000 tons. That’s a 4.5% increase over last year. Domestic increases are largely due to livestock production expansion over this past year. USDA projects exports at 7.8% greater than last year and the last half of the year could be 14% larger than the second half of this past marketing year.
“While soybean exports continue to disappoint, soybean crush levels maintain a pace to set record levels of use associated with crush this marketing year,” Hubbs says. “Domestic use of soybean meal appears set to maintain support for strong crush margins.”