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GrainEpisode 151

Supply and demand outlook for U.S. soybeans

Jan 30, 2024

U.S. soybean stocks have remained steady in recent years while global stocks increased, according to government data. One of the biggest challenges for U.S. growers in 2024 is increased competition from South America., Friesz says However, growing domestic demand could offset the likely decline in exports.

South American harvest impacts U.S. exports

The January U.S. Department of Agriculture World Agricultural Supply and Demand Estimates (WASDE) report increased U.S. carryout by 35 million, but that number could increase pending the South American harvest.

“When you look at South America, particularly Argentina and Brazil, they are anticipated to harvest a 2024 crop that is 1 billion bushels more than one year ago,” says Justin Friesz, a soybean trading expert with CHS. “Argentina’s crop is expected to be twice the size of a year ago, and Brazil is expected to harvest a near record crop. The expected production from these two countries is set to outpace worldwide demand.”

U.S. growers may feel the impact burgeoning world soybean supplies.

“Brazil is starting to export beans during the prime sales window for many U.S. farmers, leading to a decline in exports coming out of the U.S. relative to the past four years,” Friesz says.

China drives global demand

China, which boasts the world’s largest pig herd to help feed its 1.4 billion people, is the world’s largest soybean buyer. As the Chinese economy climbs out of the COVID-19 pandemic, imports are starting to bounce back.

“Although their economy is churning slowly, overall, China is trending in the right direction,” says Friesz. “China is expected to import 102 million metric tons this year, which is the country’s biggest import number ever, growing 2% over last year.”

Growers eye Brazilian crop

As soybean harvest ramps up in Brazil, market experts are trying to determine just how big that crop will be and how it will impact prices. Weather will have an impact on final production numbers.

“Some key states in Brazil dealt with dry temperatures early in the growing season,” Friesz says. “Recently, those regions did receive some moisture and we’ve seen the futures market and the price drop drastically as a result.”

Domestic crush capacity increases

Although global demand for U.S. soybeans may be slowing, domestic crush capacity is expanding, primarily due to demand for soy oil as a feedstock for renewable diesel.

“The U.S. is expected to crush a record number of soybeans this year – coming in at 100 million bushels more than last year,” Friesz says. “What we’re losing in the export channel we should be making up by crushing more beans domestically. So I think we can expect a bright future for the soybean market here at home.”

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