A glut of soybeans?

  • Published: Tuesday, July 2, 2019

The combination of the ongoing trade war, large carry-in stocks, fewer hogs in China and the potential shift of corn area to soybeans could result in a large abundance of soybeans, but this is far from certain given the severity of planting delays.

The U.S. Department of Agriculture’s May “World Ag Supply and Demand Estimates” (WASDE) report included a 4.1 billion bushel crop for 2019, but also included a recovery in U.S. soybean exports that remains far from certain. An alternative might be that 91 million acres of soybeans are planted with a lower yield of 45 bu/acre (due to excessively wet conditions), resulting in nearly the same level of production in the May WASDE. Without a trade agreement, the U.S. is able to export only 1.7 billion bushels, and we find ourselves with over 1.2 billion in ending stocks. The market’s reaction to delayed plantings for soybean prices has been postive so far, but this outcome could change quickly.

May 2019 U.S. soybean supply and use update
 2017/182018/192019/202020/21
 UnitsWASDEWASDEWASDEFAPRI% change from
2019/20
Area plantedmil ac90.289.284.683.8-1.0%
Area harvested
 
mil ac
 
89.5
 
88.1
 
83.8
 
83
 
-0.9%
 
Yield
 
bu/ac
 
49.3
 
51.6
 
49.5
 
49.1
 
-0.8%
 
Beginning stocksmil bu302438995746-25.0%
Productionmil bu4,4124,5444,1504,076-1.8%
Importsmil bu221720200.0%
Total supply
 
mil bu
 
4,735
 
4,999
 
5,165
 
4,842
 
-6.2%
 
Crushmil bu2,0552,1002,1152,133-0.8%
Seed and residualmil bu114135137119-13.3%
Domestic use
 
mil bu
 
2,169
 
2,265
 
2,252
 
2,251
 
0.0%
 
Exports
 
mil bu
 
2,129
 
1,775
 
1,950
 
1,952
 
0.1%
 
Total use
 
mil bu
 
4,297
 
4,004
 
4,195
 
4,203
 
0.2%
 
Ending stocks
 
mil bu
 
438
 
995
 
970
 
639
 
-34.1%
 
Farm price$/bu9.338.558.109.1112.4%
Soybean to corn price ratio 2.782.442.452.38-2.9%

Writer: John Kruse

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