Soybean Industry at a Crossroads: USDA Projections and Global Market Fluctuations

The USDA's recent World Agricultural Supply and Demand Estimates (WASDE) report keeps its projection for Soybean Oil usage in biofuel production unchanged for the 2024-'25 period. Despite this consistency, market experts note that the outlook for Soybean production has been lowered, while the forecast for Soybean Oil prices remains unchanged. The USDA projects Soybean production for 2024-'25 at approximately 4.4 billion bushels, a decrease of 15 million bushels due to reduced harvested area. The harvested area forecast, as reported in the USDA's June Acreage report, stands at 85.3 million acres, down 300,000 acres from the June outlook. However, the Soybean yield forecast remains steady at 52 bushels per acre.

Given the slightly lower beginning stocks, reduced production, and unchanged use, ending stocks for 2024-'25 are projected at approximately 435 million bushels, a decrease of 20 million bushels compared to the June WASDE. The USDA maintains its forecast of 14 billion pounds of Soybean Oil for biofuel production in 2024-'25, consistent with the June WASDE. This represents an increase from the estimated 13 billion pounds used in 2023-'24 and the 12.491 billion pounds in 2022-'23.

While the outlook for foreign Soybean production remains unchanged overall, higher production in Canada offsets lower production in Russia. Global Soybean beginning stocks for 2024-'25 have increased slightly, with higher stocks in China largely counterbalancing lower stocks in Argentina, Brazil, and Paraguay due to revisions for 2023-'24. Argentina's Soybean production for 2023-'24 has been revised down by 500,000 tons to approximately 49.5 million tons, based on data from Argentina's Ministry of Agriculture, Livestock and Fisheries. This downward revision, supported by lower harvest expectations, has influenced overall market trading sentiments.

China's Soybean imports for 2023-'24 have been revised upward by nearly 3 million tons to approximately 108 million tons, reflecting larger-than-anticipated arrivals expected in the fourth quarter of the marketing year. The USDA has revised upward the 2023-'24 export projections for Argentina, Brazil, Paraguay, Benin, and Canada. Considering the slightly higher beginning stocks, lower global production, and minor changes to use in 2024-'25, global Soybean stocks have been reduced by about 100,000 tons to approximately 127.8 million tons. This reduction is primarily due to lower stocks in Argentina, Brazil, Paraguay, Russia, the EU, and the U.S., largely offset by higher stocks in China.

In Brazil, the implementation of rising biodiesel mandates and recent tax measures suggests that the country will face challenges in balancing increasing domestic demand with economic pressures to maintain its position in the global Soybean Oil market. This situation is likely to impact overall product availability for other importing nations, potentially creating an imbalanced supply-demand scenario in the global market.