Extension Communications
3614 Administrative Services Building
Ames, Iowa 50011-3614
(515) 294-9915
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Extension Communications |
10/23/03
FOR IMMEDIATE RELEASE
Contacts:
Robert Wisner, Ag Economics, (515) 294-6310, wisner@iastate.edu
Jean McGuire, Continuing Education and Communication Services, (515) 294-7033,
jmcguire@iastate.edu
World Soybean Supplies Not as Tight as in the U.S.
AMES, Iowa - While the U.S. soybean industry faces prospects for the tightest carryover stocks as a percent of annual use since the mid-1960s, and possibly the tightest on record, an Iowa State University Extension economist says world supplies look much more adequate.
Total use of U.S. soybeans will almost certainly be reduced by at least 9 to 10 percent from last year because of short supplies, according to ISU economist Robert Wisner. In contrast to the U.S. situation, the economist noted that world soybean use this marketing year is projected to grow at about the five-year average of 5 percent.
Wisner said the sharp contrast between very tight U.S. soybean supplies and adequate world supplies will cause U.S. prices much of this season to be well above those of competitors, in order to shift demand from the U.S. to South America. Soybean markets will attempt to find a level that causes the needed shift without curtailing world soybean use.
The economist noted that much of the needed cut in use of U.S. soybeans is expected to come from reduced exports of beans and bean products. USDA projections show an anticipated 2.4 percent reduction in domestic use of soybean oil and a 2.8 percent reduction in domestic soybean meal use. But U.S. bean exports are expected to be down 16 percent, soybean oil down 62 percent, and soybean meal exports down 17 percent from last season. Part of the reduction in domestic soybean meal feeding will be offset by increased feeding of distillers grain and solubles from new ethanol plants.
South America has become a huge player in global soybean markets in recent years, so that the world faces a major soybean harvest every six months. Wisner said the current USDA projections indicate the South American spring 2004 crop will be more than 50 percent larger than the current U.S. soybean production.
Since South America's domestic soybean use is much less than in the U.S., a higher percentage of its crop is exported. The economist said combined exports from the five main soybean-producing countries in South America for 2003-04 are projected to be three times as large as combined U.S. soybean and soybean product exports. These projections are based on a slower rate of increase in South American production than last spring because of strength in the Brazilian currency.
Wisner said that while potential South American competition will be large next spring and summer, relatively high U.S. prices will be needed this fall and winter to cause the needed cut in U.S. exports and domestic use. He added that with export sales through Oct. 9 running 37 percent above a year earlier on beans, up 27 percent on meal, and down 22 percent on soy oil, prices have not yet caused the needed rationing of limited supplies. Thus, some further strength in soybean prices is possible until there is evidence of a substantial reduction in U.S. export sales. December-February prices will be very sensitive to South American crop conditions.
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