June 30, 2022

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Executive Summary

Drivers for the soybean industry include higher production, strong export demand and anticipated higher prices.

  • Soybean production is forecasted to be up 4.6% year over year.
  • Chinese imports of U.S. soybeans have strengthened export demand.
  • The USDA average season price for 2022-23 soybeans is $14.70 per bushel, up 10.1% from 2021.

Supply/Demand

Cold, wet conditions in the Midwest delayed soybean plantings, but the soybean crop returned to a normal development stage by mid-June. For 2022-23 crop, production is estimated at 4,640 million bushels, up 4.6% from the 2021-22 crop. Higher anticipated planted acres and yields will boost soybean production. While beginning stocks fell to 205 million bushels for the start of the 2022-23 marketing year (September-August), increases in both soybean supply and total uses are forecasted to bolster ending stocks. 2022-23 ending stocks are projected at 280 million bushels, a 75 million bushel increase from the 2021-22 marketing year.

U.S. soybean exports were strong during the month of April as importing countries focused their attention away from South American soybeans to U.S. soybeans. In a typical marketing year, Brazilian soybeans would dominate the export market. This year, Brazil exported 100 million fewer bushels in April 2022 compared to the previous year (reducing exports by 1/6th). To make up for the loss, U.S. exports increased, led by increases to China. 2022 soybean exports to China increased by 7.6 million metric tons compared to the previous year’s season average (145% increase). The Chinese market is the largest purchaser of U.S. soybeans (purchasing $14.1 billion of soybeans in 2021, quintuple the amount of the next largest country, Mexico).

China extended their zero-COVID policy until 2027. The zero-COVID policy disrupted supply chains, halting export growth and slowing global economic growth. As the largest export market for U.S. soybeans, this policy presents potential obstacles ranging from port shutdowns to increases in freight costs to a slowdown of total Chinese exports. (This played out to the extreme in 2018, when China added a 25% tariff to U.S. soybean imports causing an estimated $3.23 billion soybean value loss for U.S. producers). While the ramifications of this policy are still unknown, it presents considerable risk to all U.S. commodities that are heavily traded with China.

U.S. Soybean Supply and Use
U.S. Soybean Supply and Use

Source: World Agricultural Supply and Demand Estimates. June 10, 2022.

Prices

Lower global supplies from declines in South American crop and increased uncertainty from the conflict in Ukraine spurred higher soybean prices. The USDA forecasts domestic soybean season-average prices at $13.25, 22.7% higher year over year. Higher soybean prices and consolidating supply of vegetable oil pushed soybean oil prices to rise 229% in two years. Higher crush margins and domestic demand strengthened soybean meal prices. Soybean meal export prices rose from $431 average per ton in November 2021 to an average of $538 per ton in February 2022. 

Soybean futures prices have risen substantially. Chicago Board of Trade (CBOT) May soybean contracts rose from $13.50 on Jan. 1 to $17.18 on March 23, a 27.3% increase. All CBOT 2022 futures contracts have posted price increases since December fueled by oilseeds market uncertainty. However, new crop contract prices are lower than near term contracts. The widening premium between old and new crops is encouraging producers to sell now rather than holding on to soybean stocks. Widening premiums and elevated prices are discouraging near term purchases, and buyers that can wait are incentivized to purchase new soybean crop contracts instead of buying now.  

The USDA projects soybean acres at 91 million acres in 2022, a new record and 6.7% above the five-year average. Of the 30 states that plant soybeans, 25 of the states intend to plant more soybean acres than last year. The planting intentions report suggests the largest increase in planted soybean acres in Illinois and Missouri, both plan to plant an additional 400,000 acres. The increase in acreage is largely tied to higher projected farmer returns for soybeans which outperformed corn returns due to the lower cost associated with less fertilizer use.

Prices

Soybean season average price for the new crop is forecasted at $14.70 per bushel, up 10.1% year over year and $0.30 per bushel higher than May’s forecast. Soybean prices averaged $10.63 per bushel from 2010-2020. With even the most moderate price estimates for soybean prices at $12.50 per bushel (Office of the Congressional Budget forecast), soybean prices will remain favorable for growers. Prices for soybean oil and soybean meal fell from last year but remain historically high. Soybean oil prices are $0.05 lower at $0.70 per pound, and soybean meal prices are forecast at $400 per short ton, down 5.8% year over year.

Following a poor South American soybean crop, prices surged and soybean futures prices increased from $12.10 in November to over $16.60 per bushel for July 2022 futures contracts. There is mounting global pressure for the new U.S. soybean crop to make up for the 22 million metric ton decline in South American soybean production supporting higher soybean prices.


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Additional Information

Northwest FCS Business Management Center
www.northwestfcs.com/ag-industries/industry-insights

CoBank Knowledge Exchange
www.cobank.com/Knowledge-Exchange

Agricultural Marketing Resource Center
www.agmrc.org

Energy Information Administration
www.eia.doe.gov

The National Biodiesel Board
www.biodiesel.org

USDA Economic Research Service
www.ers.usda.gov/topics/crops/soybeans-oil-crops

USDA World Agricultural Supply and Demand Estimates
www.usda.gov/oce/commodity/wasde

Learn More

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