02.23.10South America, China Influence Late Winter Markets February Market Production Analysis and Market Outlook By David Asbridge
The size of the U.S. soybean crop did not change in this month’s U.S. Department of Agriculture (USDA) report, although it could next month after USDA finishes its special survey of U.S. farmers who may not have been able to harvest all their crops last fall due to adverse weather conditions. The U.S. demand estimates did increase, however, as USDA now thinks that both crush and exports for the 2009/10 marketing year will be bigger than previously thought. The crush estimate increased to 1.72 billion bushels due to an expected increase in foreign demand for meal, while the soybean export estimate grew to 1.4 billion bushels.
The international production situation has also changed. USDA now believes that Brazilian farmers will harvest an even larger crop than previously anticipated. The department now estimates Brazilian soybean production at 66 million metric tons, or about 2.4 billion bushels. This would be Brazil’s largest crop ever, 16 percent larger than last year’s crop. The Brazilians also may export more of that crop as the export estimate this month grew to over 25 million metric tons, or 930 million bushels. The Argentine production estimate was left at 53 million metric tons, or 1.95 billion bushels, which would set a new record for farmers in that country as well.
The U.S. soybean market has reflected mixed feelings about these numbers. After falling almost nonstop since the first of January, the market bounced back based on the great export figures the U.S. has been posting. The majority of these exports have been to China, which now represents the world’s largest soybean-consuming nation, having surpassed the United States in soybean consumption about two years ago. China is expected to consume more than 2 billion bushels of soybeans this year, or the equivalent of about 60 percent of the entire U.S. crop. Of course, the Chinese won’t get all of their beans from the United States, but they will import a lot of them from here in addition to buying soybeans from Brazil and Argentina to supplement what they grow themselves.
U.S. exports to China so far this marketing year have already reached over 600 million bushels, compared with just 400 million at this time last year. That does not include the 200 million bushels that have been sold to the Chinese that have not yet been shipped. The chart shows how their imports have grown while their production of soybeans has stagnated at between 500 million and 550 million bushels per year.
The Chinese will crush most of their soybeans into meal and oil. They will crush about 1.7 billion bushels this year, about as many as we’ll crush here in the United States. The other 380 million bushels will be consumed by humans or fed to animals in other ways than soybean meal. As far as other soy products, they will consume over 10 million metric tons of soybean oil this year, again the world leader. As for the meal, their pork industry will consume most of what they produce. China also holds the title as the world’s largest pork producer and consumer. It also is beginning to produce more poultry, but this animal agriculture sector is much smaller than the pork sector.
Now that we have a better handle on the world soybean production figures, the focus will be on the demand side until U.S. soybean farmers get closer to planting season. Stay tuned here over the next few months to see planting estimates for the 2010 U.S. soybean crop.
Also, please remember that you are encouraged to leave questions and comments on this article in the section below. See you next month!
posted by Expert 1:36 pm