USDA: Record supply will be met by strong demand

On May 10th, the United States Department of Agriculture released a long-awaited report on the supply and demand of soybeans. Ahead of the report, analysts were divided: will the demand meet the expected rising stocks?

World soybean production is projected to reach 12,664 million bushels. This is the equivalent of 344.7 Million Metric Tons (MMT). Compared to last year, the USDA forecasts is lower by 123 million bushels.

The world’s beginning stocks are projected to soar to 3,311 million bushels (90.14 MMT), up 480 million from last year. However, the world’s demand for soybean is seen to increase as well. The report foresees ending stocks to end up at 3,262 million bushels (88.81 MMT), 49 million bushels lower than 2017/18 beginning stocks.

US soybean production is projected at 4,255 million bushels (115.8 MMT), or 33.5% of the world’s production. This represents 52 million less than last year’s record harvest.

Despite the drop in US production, the US ending stock is still projected to increase from 435 million bushels (11.85 MMT) to 480 million bushels. This could pressure prices and reduce earnings for US farmers.

Moreover, this excess in supply might reduce volatility, hence reducing trader’s earnings opportunities.
(1 Metric Ton = 36.74 bushels)

Sources:
www.usda.gov/oce/commodity/wasde/latest.pdf
www.reuters.com/article/us-usa-soybeans-braun-idUSKBN186165
www.reuters.com/article/us-usda-crops-idUSKBN1862CB
www.reuters.com/article/usa-grains-stocks-idUSL1N1IC020
ussec.org/resources/conversion-table/