Market Production Analysis and Market Outlook – Soybean Production Increases in U.S. and Around the World

By David Asbridge

The U.S. soybean crop has increased in size once again, at least according to United States Department of Agriculture’s (USDA’s) latest crop report. They estimate that U.S. soybean farmers harvested a record-setting 3.36 billion bushels of soybeans over the past few months. The production record was set based on a record level of both planted and harvested acreage, 77.5 million and 76.4 million acres, respectively. The planted acreage number surpassed the previous record of 75.7 million acres set in 2008. In addition to the record acreage, the yield for the 2009 crop also set a new record at 44 bushels per acre, eclipsing the previous record yield of 43.1 bushels per acre set in 2005.

The demand side of the soybean balance is also expected to set a new record for the 2009/10 crop year at 3.26 billion bushels. Although soybean crush will not be a record, it will show an increase from last year’s depressed level to more than 1.7 billion bushels. Exports, the second-largest demand component, will set a new record this year at 1.38 billion bushels, a 7.1 percent increase over the previous record set in 2008.

When crushed, soybeans create meal (protein) and oil. Animal agriculture uses most of the meal, and the oil is used for such things as food and the manufacture of soy biodiesel. Those products are also setting new records this year. Soybean meal exports are anticipated to reach 9.9 million tons this year, a new record and 3 percent above the previous record set way back in 1997. Soybean oil exports are also expected to set a new record for the 2009 crop as they hit 3.25 billion pounds, a 5.5 percent increase over the previous record, also set back in 1997. The reason for record exports of both meal and oil this year was the drought in South America, which lowered South American growers’ production dramatically and caused them to have to cut back on crush and product exports.

Speaking of South America, USDA expects both Brazil and Argentina to set new records for soybean production this coming year following the drought-reduced crops last year. Brazil has increased their acreage this year by about 2.5 million acres and has had relatively good growing conditions so far. This should enable its producers to push their production up to 65 million tonnes (almost 2.4 billion bushels). The drought really hurt Argentine producers last year as their production fell more than 30 percent. This year, however, Argentine soybean acreage increased by nearly seven million acres, and USDA expects them to push production to 53 million tonnes (almost 2.0 billion bushels). Other South American producers such as Uruguay and Paraguay are also expected to produce more.

Total world production of soybeans in 2009/10 is expected to grow from this past year’s 7.75 billion bushels to 9.3 billion. Meanwhile, total demand is expected to grow and reach a new record, but it will only increase from about 8.1 billion bushels to 8.6 billion bushels. Good growth, no doubt, but not enough to keep stocks from increasing rather substantially. World stocks of soybeans dropped about 400 million bushels by the end of the 2008/09 year but will jump by over 600 million bushels, or nearly 40 percent, this year to the second-highest level in history, 2.2 billion bushels.

On a more local note, Iowa won the state soybean production contest in 2009 with 486 million bushels while Illinois came in a close second at 430 million bushels. Those two leading states swap the title periodically with Iowa at a definite advantage, having led production eight of the last 10 years, with Illinois leading once and a virtual tie in the 2000 crop year. The other major U.S. soybean-producing states are shown in the chart below. The other 20 states that USDA tracks range from 0.8 million bushels in West Virginia up to 79.6 million bushels in Michigan.


Now that we have a fairly good idea of production for 2009, the market will focus more on the demand side, at least until we get closer to the main harvest below the equator. Stay tuned here over the next few months to see what a record crop in South America might mean for acreage, production and prices for the 2010 U.S. crop. Also, please remember that you are encouraged to leave comments on this article in the comment section below. Talk with you next month!

posted by Expert 10:06 am