USDA’s 2016/17 forecast of the domestic soybean crush is unchanged at 1.93 billion bushels. Forecasts of domestic and export demand for soybean meal and soybean oil are also unchanged. The forecast of 2016/17 soybean exports is unchanged at 2.05 billion bushels, so the forecast of season-ending stocks remains at 420 million bushels. USDA’s forecast of the U.S. average farm price for 2016/17 is narrowed this month to $9.10-$9.90 per bushel.
Domestic Outlook
Record Year for U.S. Soybean Demand May Be Passing a Seasonal Peak
Soybean crushing dipped in December 2016 to 169.2 million bushels from 170.7 million in November. Even so, the cumulative September-December 2016 crush was 2.6 percent higher than a year earlier at 654.1 million bushels. USDA’s 2016/17 forecast of the domestic crush is unchanged at 1.93 billion bushels, compared to 1.886 million in 2015/16.
Forecasts of domestic and export demand for soybean meal are also unchanged. Likewise, for soybean oil, 2016/17 production and demand are unchanged. Season-ending soybean oil stocks are seen 25 million pounds higher this month (to 1.677 billion pounds) based on higher forecast imports (300 million pounds).
USDA’s forecast of 2016/17 soybean exports is also unchanged at 2.05 billion bushels, well above the 2015/16 total of 1.936 billion bushels. U.S. export sales commitments of soybeans are currently at a record high.
Export shipments in January, although slowing from December, were the third-highest ever for the month. Cumulative U.S. export inspections of soybeans through January were 1.465 billion bushels. While exceeding last year’s pace by more than 200 million bushels, these gains may quickly erode in the summer with larger South American supplies compared to last year.
Absent any changes in soybean supply or demand, the USDA forecast of season-ending stocks remains at 420 million bushels.
The rate of seasonal decline in soybean demand will largely determine the trend in prices for the remainder of the crop year. Up to now, record September-December use has buttressed prices even in the face of a massive supply. In January, cash soybean prices inched up upon news of excessive wetness in Argentina.
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A countering factor, however, is an accelerating pace of soybean shipments from Brazil. This has begun to narrow the gap between Brazil export prices and U.S. Gulf prices. USDA’s forecast of the U.S. average farm price for 2016/17 is narrowed this month to $9.10-$9.90 per bushel. Likewise, the price forecast for soybean meal is narrowed to $310-$340 per short ton. The forecast price range for soybean oil is unchanged at 34-37 cents per pound.
Canola Oil Imports Surge With a Strong Increase in Consumption
Domestic consumption of soybean oil this season is being tempered by a sharp increase in the use of canola oil. Compared to a year ago, U.S. canola processors have boosted the June-December crush by 40 percent. In addition, imports of canola oil from Canada are very robust, with an expected record output by Canadian crushers.
USDA raised its forecast of canola oil imports for 2016/17 by 349 million pounds this month to 4.41 billion. For comparison, imports peaked last year at 3.96 billion pounds. This combination of higher domestic and imported supplies is seen swelling 2016/17 use of canola oil to 6 billion pounds from 5.3 billion in 2015/16.
Use of canola oil for producing biodiesel has been particularly strong this season.
