U.S. farmers will harvest a sharply smaller soybean crop this year, driven away from the oilseed by weak market prices and a staggeringly large soy surplus after a string of bumper crops, according to traders anticipating two USDA reports today. Even so, the International Grains Council (IGC) projects the third year in a row of record-large soybean production globally.
In surveys by wire services, traders said they expect U.S. farmers to reduce soybean plantings by 3 percent this spring in favor of corn, whose plantings are expected to be up 2.5 percent on the promise of higher revenue. Although the U.S. soybean crop would be 7 percent smaller than the record set last year, it would still be the fourth largest ever, assuming normal weather and “trend line” yields.
Today at noon, the USDA is scheduled to release its annual Prospective Plantings report, based on a survey of more than 80,000 growers — the first time farmers have had input into USDA estimates of this year’s crops. Plantings are a key element in projecting crop size. Yields are another, as are the expected loss of some plantings to drought, flood, disease, pests, or poor germination. The USDA polled farmers before flooding hit the northern Plains and western Corn Belt in the past couple of weeks.
In addition, the USDA will soon release its quarterly Grain Stocks report, which is expected to show that soybean supplies are more than a half-billion bushels larger than they were in March 2018.
Both the USDA and the IGC project that the U.S. soybean stockpile will more than double this marketing year. Usually, half the crop is exported, but shipments have dwindled due to the trade war with China. The USDA estimates that a record 900 million bushels — a nearly three-month supply — will be in storage when the fall harvest begins.
World soybean production in 2019/20 — the crop that will be harvested in the year ahead — is likely to match the record 359 million tonnes of 2018/19, said London-based IGC in its first full set of supply and demand projections for the new crop. “Production is seen steady year-on-year in 2019/20,” said the council. “The trade outlook is uncertain, being largely dependent on Chinese demand.” China used to buy 1 of every 3 bushels of U.S. soybeans, but it has turned to Brazil and Argentina during the trade war. Still, it has not been able to fully offset the loss of U.S. soy.
Global soy stockpiles may shrink marginally, said the IGC, but “heavy carry-ins” from the current trade year will offset growing world demand for soybeans. The preliminary outlook is “world soybean production remaining high on anticipated modest gains in acreage.”
U.S. soybean production is pegged at 114 million tonnes by the IGC, roughly similar to a USDA projection in February and the potential harvest of 4.2 billion bushels from the 86.2 million acres that traders expect will be planted. The IGC projects U.S. soybean stocks of 23 million tonnes when this year’s crop is ready for harvest, essentially the same as the 844 million bushels that the USDA has projected.
The U.S. soy stockpile would be 45 percent of the IGC projection of global stocks of 51 million tonnes at the end of 2019/20.
Corn and soybeans are the two most widely planted U.S. crops, often grown side by side in the Farm Belt. They are used prominently in livestock rations and have an array of uses in industry — biofuels is a prominent example — and as ingredients in food. Nearly 280,000 square miles could be planted to the two crops this year.