Grain Market Outlook

Soybean Outlook and Market Impacts from the May WASDE Report

May 16, 2012

Summary

In its May 10^th World Agricultural Supply and Demand Estimates (WASDE) report, the USDA made its first projection of U.S. and World supply-demand balances for soybeans and other oilseed crops for the 2012/13 marketing year (MY 2012/13).  The USDA projected that U.S. supply-demand balances would tighten considerably, with ending stocks-to-use levels dropping to near record lows, and with likely record high prices for MY 2012/13.  The USDA also projected that foreign soybean production would increase to record high levels in the coming year. In the same report there were projections of old crop supply-demand balances tightening considerably – driven by soybean production shortfalls in South America and continuing strong World exports in spite of high World soybean prices.

U.S. Soybean Supply-Demand Balances: Based on the March 30^th USDA Acreage report, the USDA projected U.S. soybean planted & harvested acreage of 73.9 million acres (ma) and 73.0 ma, respectively.  U.S. soybean yields were projected to be 43.9 bu/ac, based on 1989-2010 yield trends. The USDA projected 2012 U.S. soybean production at 3.205 billion bushels (bb), compared to 3.056 bb in 2011 and 3.329 bb in 2010.  Given MY 2012/13 prospects for marginal increases in U.S. domestic crushings (1.655 bb) and record high exports (1.505 bb), the USDA projected that total U.S. soybean use would equal 3.285 bb, with ending stocks of 145 million bushels (mb) (4.4% S/U), and prices in the range of $12.00-$14.00 per bushel.  

Adjustments in MY 2011/12 U.S. supply-demand balances point to a tightening old crop market situation, as evidenced by increased U.S. domestic crushings (1.645 bb, up 15 mb) and exports (1.315 bb, up 25 mb), and a corresponding reduction in ending stocks (210 mb, down 40 mb) and % ending stocks-to-use (6.8%, down from 8.2% in April). 

World Soybean Supply-Demand Balances: The USDA projected that World soybean production would expand to 271 mmt in MY 2012/13, up from 237 mmt and 264.87 mmt in MY 2011/12 and MY 2010/11, respectively.  Consequently, World soybean supplies, trade, total use, and ending stocks were all projected to increase in MY 2012/13.    

However, in MY 2011/12 World soybean supply-demand balances were projected to be tighter in the May WASDE report. Driven by reductions in 2012 South American soybean production prospects and projections that Brazil and Argentina soybean exports would be reduced only marginally, this report projected further tightening of soybean ending stocks in these countries in MY 2011/12. This was reflected in projected World soybean ending stocks for MY 2011/12 of 53.2 mmt (20.9% S/U), which were down from the April (55.5 mmt, 21.9% S/U) and March (57.3 mmt, 22.5% S/U) WASDE reports.

Soybean Market Questions in 2012: There is still the possibility that 2012 U.S. soybean planted acreage will be greater than this initial USDA forecast, either due to changes in farmer’s planting decisions or increased double cropping following earlier than usual winter wheat harvests. Also, the extent of the shortfall in South American soybean production may still not be factored into market prices. Given tightening U.S. and World soybean market supply-demand conditions, soybean markets will be extremely sensitive to any weather threats to 2012 U.S. soybean production this summer. 

In May 10^th WASDE report, the USDA gave its initial U.S. soybean production and supply-demand forecast for the 2012/13 “new crop” marketing year, projecting lower 2012 U.S. soybean acreage, increased yields, and higher production compared to MY 2011/12.  The USDA projected strong U.S. soybean usage in MY 2012/12,  as well as lower ending stocks and record high U.S. soybean prices.    

U.S. Soybean Planted & Harvested Acres for 2012

The USDA projected that 73.9 million acres (ma) of soybeans would be planted in the U.S. in 2012, based on estimates from the USDA NASS Prospective plantings report on March 30, 2012 (Figure 1). The USDA also projected that 73.0 ma of U.S. soybeans would be harvested, based on the most recent 5 year average of historical harvested-to-planted soybean acreage. The projected proportion of harvested-to-planted acres in 2012 of 98.8% used by the USDA is essentially equal to the 2007-2011 average of 97.7%. 

Figure 1. U.S. Soybean Planted Acreage (1973-2011) and Projections for 2012

U.S. Soybean Yield & Production for 2012

The USDA projected that U.S. soybean yields in 2012 would be 43.9 bushels per acre, based on a linear trend for the national average yield over the 1989-2010 period (Figure 2).  Given these projections of U.S. soybean acreage and yields, the USDA projects 2012 U.S. soybean production will be 3.205 billion bushels (bb).   A similar linear KSU yield trend projection for the 1973-2011 period with all high and low years included projects 2012 yields to be 43.8 bushels per acre – essentially the same. 

Figure 2. U.S. Soybean Yield Trend (1973-2011) and Projections for 2012

U.S. Soybean Total Supplies up to 3.430 bb for MY 2012/13:

With projected MY 2012/13 beginning stocks of 210 mb, 2012 production of 3.205 bb, and imports of 15 mb, total supplies of U.S. corn are projected to be 3.430 bb for MY 2012/13 by the USDA (Table 1).  It is possible than increase double cropping of U.S. soybeans following early harvested wheat in U.S. hard red winter and soft red winter wheat production areas could lead to at least marginally increased U.S. soybean acreage and production in 2012, to larger levels than is projected in the May USDA WASDE report.

Table 1. U.S. Soybean Supply-Demand Balance Sheet: MY 2007/08 through MY 2011/12

  (May 10, 2012 USDA WASDE Report)

Total Soybean Use up to 3.285 bb in MY 2012/13

The USDA raised its projected feed use and total usage of U.S. soybeans from MY 2011/12 to MY 2012/13 based on expectations of a sizable increase in 2012 U.S. soybean production (Table 1 & Figure 3). 

Domestic Crushings = 1.655 bb: The USDA increased its projection of 1.655 bb U.S. soybean domestic crush in MY 2012/13 from the previous year, citing how lower soybean extraction rates offset reduced total soybean meal use.  This would marginally be the largest amount of U.S. soybean domestic crush in three marketing years (compared to 1.645 bb in MY 2011/12 and 1.648 bb in MY 2010/11), but is less than 1.752 bb domestic crush in MY 2009/10.

Export Use = 1.505 bb: With its projections of larger U.S. supplies, lower prices, and ongoing Chinese export demand, as well as South American soybean production shortfalls, the USDA forecast that MY 2012/13 U.S. soybean exports would equal a record high 1.505 bb.  This amount of U.S. exports which would be up from the MY 2011/12 projection of 1.315 bb and from the previous record of 1.501 bb in MY 2010/11, and the near record of 1.499 bb in MY 2009/10. Seed & Residual Use = 125 mb: The USDA raised its projection of MY 2012/13 U.S. soybean seed and residual use up to 125 mb, which compares to 116 mb in MY 2011/12, 130 mb in MY 2010/11, and 110 mb in MY 2009/10.

Total Soybean Use = 3.285 bb: For “new crop” MY 2012/13, the USDA projects that total use of soybeans in the U.S. will be the 2^nd highest on record at 3.285 bb.  The projection of 3.285 bb for MY 2012/13 is up 6.8% from 3.076 bb in MY 2011/12, marginally larger than 3.280 bb in MY 2010/11, and below the record high of 3.361 bb in MY 2009/10. 

Recent U.S. Soybean Use Trends

If these projections for MY 2012/13 hold true, they would signal a steadying out of the recent downtrend in U.S. soybean crush and a return to what appears to be a “top end” for U.S. soybean exports in the 1.495-1.505 bb range (Figure 3).  It would also signal a decline in U.S. soybean ending stocks (14 mb in MY 2012/13) back down to the range of 138-141 mb as occurred in MY 2008/09 (138 mb) and MY 2009/10 (151 mb). 

Figure 3. Trends in U.S. Soybean Use and Ending Stocks: MY 2004/05 through MY 2012/13

                    (May 10, 2012 USDA WASDE Report)

“New Crop” Ending Stocks (145 mb) & Ending Stocks-to-Use (4.4%) 

As a result of the projected moderation in U.S. soybean acres and production and strong soybean exports and overall use, the USDA projected MY 2012/13 ending stocks to be 145 mb, which is down from its estimate of 210 mb from in MY 2011/12, and also less than 215 bb in MY 2010/11. However, this projection of U.S. ending soybean stocks for MY 2012/13 of 145 mb is in the range of 115 and 138 mb for MY 2009/10 and MH 2008/09, respectively.

The MY 2012/13 projection equals 4.40% ending stocks-to-use, which is down from 6.8% and 6.6% for MY 2011/12 and MY 2010/11, respectively. However, it is below tight U.S. ending stocks-to-use levels of 4.53% and 4.49% in MY 2007/08 and MY 2008/09, respectively, and essentially equal to the previous market low of 4.45% S/U in MY 2003/04.  The larger picture issue to remember with these “marginal” tightly measured calculations, is that U.S. soybean stocks are projected to be down to essentially minimal carryover levels, with little “room” or margin for error from potential U.S. soybean production problems in 2012 (Figure 4). 

 “New Crop” MY 2012/13 U.S. Soybean Prices = $12.00-$14.00 /bu.

With lower U.S. soybean acreage, moderately higher production, stronger domestic crush and exports, and tighter ending stocks projected for MY 2012/13, the USDA projects that market forces will lead to likely record high average U.S. soybean prices in MY 2012/13 (Table 1 & Figure 4).  The USDA projected MY 2012/13 U.S. average soybean prices to in the range of $12.00-$14.00 per bushel in MY 2012/13, compared to $12.35 in MY 2011/12 in the May WASDE report (Figure 4).  The midpoint of this MY 2012/13 projection of $13.00 per bushel would be record high, and compares to average prices of $12.35 in MY 2011/12, $11.30 in MY 2010/11, and $9.59 per bushel in MY 2009/10.  

Figure 4. U.S. Soybean Ending Stocks vs U.S. Avg. Cash Prices: MY 1973/74 through MY 2012/13      (May 10, 2012 USDA WASDE Report)

The USDA World Agricultural Outlook Board raised is projection of domestic crush, exports, and total usage for the 2011/12 “old crop” marketing year in its May 10^th WASDE report.  As a result, the USDA’s estimate of ending stocks and % ending stocks-to-use for MY 2011/12 were tightened significantly from the April WASDE report (Table 1 & Figure 3).    

U.S. Soybean Total Supplies for “Old Crop” MY 2011/12

With projected MY 2011/12 beginning stocks of 215 bb, 2011 U.S. production of 3.056 bb, and imports of 15 mb, U.S. soybean total supplies for MY 2011/12 are projected to be 3.286 bb.   Projected U.S. soybean total supplies in MY 2011/12 of 3.286 bb are down from 3.495 bb in MY 2010/11 and from 3.512 bb in MY 2009/10 (Table 1).  This amount of total U.S. soybean supplies is the lowest since 3.185 bb in MY 2008/09 and 3.261 bb in MY 2007/08.

Total U.S. Soybean Use of 3.076 bb in “Old Crop” MY 2011/12:

The USDA raised its projected total use of soybeans in MY 2011/12 due to projected increases in domestic crush and exports (Table 1 & Figure 3).  The increase in projected exports was in line with market expectations following from recent South American soybean production shortfalls.

Soybean crush is projected to be 1.645 bb for MY 2011/12, which is up 30 mb from April.  But, soybean crush of 1.645 bb in MY 2011/12 is still down from 1.648 bb in MY 2010/11 and 1.752 bb in MY 2009/10.  Domestic crush has trended lower since the highs of 1.808, 1.803, and 1.752 bb in MY 2006/07, MY 2007/08, and MY 2009/10, respectively (Figure 3).

Soybean exports are projected to be 1.315 bb in MY 2011/12, which is up 25 mb from April.  The May WASDE projection of 1.315 bb is still less than the record high of 1.501 bb in MY 2010/11 and the near record of 1.499 bb in MY 2009/10.  

Comments on the pace of U.S. soybean exports to date in MY 2011/12:  The 2011/12 “old crop” marketing year for U.S. soybeans lasts from September 1, 2011 through August 31, 2012.  Through May 3^rd (week 35 of 52 or 67.3% of the way through MY 2011/12) the USDA Foreign Agricultural Service (FAS) reported that 1.081 bb of U.S. soybeans has actually been shipped from U.S. ports.  This amounts to 82% of the current USDA projection for the current marketing year.   With additional forward sales of 185 mb accounted for, total U.S. soybean export commitments equal 1.266 bb or 96% of the USDA projection of 1.315 bb for MY 2011/12.  If the recent strong pace of U.S. soybean export shipments and sales continues, it is possible that further increases in MY 2011/12 export projections will occur – say by 10-35 million bushels (mb) – raising U.S. soybean export projections for MY 2011/12 closer to 1.325-1.350 bb.  Such increases in projected U.S. soybean exports would lead to lower U.S. soybean ending stocks for MY 2011/12, down to the 175-200 mb range.  

Comments on trends in U.S. exports: Exports had been trending strongly higher on a year-to-year basis since the mid 2000’s, from 940 mb in MY 2005/06 eventually up to 1.499 bb and 1.501 bb in MY 2009/10 and MY 2010/11, respectively.  The decline in MY 2011/12 exports to 1.315 bb signaled at least a temporary moderation in that trend.  However, the unexpected recent crop shortfall in South America is causing U.S. soybean exports to “bump” higher again.  

Total U.S. soybean use is projected to be 3.071 bb for MY 2011/12, up 40 mb from the April WASDE report. This projection for MY 2011/12 of 3.071 bb is down from 3.280 bb in MY 2010/11 and 3.361 bb in MY 2009/10, and compares to 3.047 bb in MY 2008/09, 3.056 bb in MY 2007/08, and 3.081 bb in MY 2006.07.  Prior to MY 2006/07 total U.S. soybean usage had never reached 3.00 bb per marketing year.

U.S. Soybean Ending Stocks, Stocks-to-Use, and Prices for “Old Crop” MY 2011/12

The USDA reduced its projection of MY 2011/12 ending stocks to 210 mb, which is down 40 mb from the April WASDE, and compares to 215 mb in MY 2010/11, 151 mb in MY 2009/10, and 138 mb in MY 2008/09 (Table 1 & Figure 3).  Associated with its reduction in MY 2011/12 ending stocks, the USDA reduced its projection of MY 2011/12 % ending stocks-to-use to 6.8%, which is down 8.2% from the April WASDE, and compares to 6.6% in MY 2010/11, 4.5% in both MY 2009/10 and 2008/09 (Table 1 and Figure 4). 

The USDA projected MY 2011/12 U.S. average soybean prices to be $12.35 per bushel, compared to the midpoint of $12.25 of the $12.00-$12.50 range projected in the April WASDE report.  Current projections of MY 2011/12 prices of $12.35 per bushel are up from $11.30 in MY 2010/11, 9.59 in MY 2009/10, $9.97 in MY 2008/09, and $10.10 in MY 2007/08.  

The projected supply-demand balance sheet for U.S. soybean oil in MY 2012/13 reflects tightening stocks and near record high prices (Table 2). 

Table 2. U.S. Soybean Oil Supply-Demand Balance Sheet: MY 2007/08 through MY 2012/13

   (May 10, 2012 USDA WASDE Report)

Beginning stocks of U.S. soybean oil are projected to be 2.565 billion pounds (bp), up from 2.425 by in MY 2011/12, but down from 3.406 bp in MY 2010/11 and from 2.861 bp in MY 2009/10.  Soybean oil production in the U.S. is projected to be 18.915 bp in MY 2012/13, down from 19.055 bp in MY 2011/12, but up from 18.888 bp two years ago. Recent U.S. oilseed crush reports and/or expectations for the remainder of the current “old crop” marketing year (i.e., through September 30, 2012) led the USDA to raise its projection of MY 2011/12 production by 1.5% from 18.780 bp to 19.055 bp in its April WASDE report.  Soybean oil imports are projected to be a near record high 195 million pounds (mp) are up from 185 mp in MY 2011/12, but are behind the record high of 306 mp in MY 2003/04 and essentially equal to 194 mp in MY 1987/88.  Projected U.S. total supplies of soybean oil of 21.675 bp for MY 2012/13 are up from 21.665 by last year, but down from 22.453 and 22.578 bp in MY 2010/11 and MY 2009/10, respectively.  The USDA raised its projection of MY 2011/12 U.S. soybean oil supplies from 21.390 bp in April to 21.665 this month (Table 2). 

Projected domestic disappearance of U.S. soybean oil for MY 2012/13 is 18.200 bp, up from 17.900 bp in MY 2011/12 and from 16.795 bp in MY 2009/10.  The category of “domestic disappearance” had previously been reported by the USDA in sub-parts, as domestic methyl ester (biodiesel) use and food, feed & industrial use. However, that practice was discontinued in the May WASDE report.  Soybean oil exports are projected to by 1.250 bp in MY 2012/13, up from 1.200 bp in MY 2011/12, but down dramatically from 3.233 bp in MY 2010/11 and from 3.359 bp in MY 2009/10.  Projected total U.S. soybean oil usage of 19.450 bp for MY 2012/13 is up from 19.100 bp in MY 2011/12, and compares to 20.028 bp in MY 2010/11 and 19.173 bp in MY 2009/10. 

Soybean oil ending stocks in the U.S. are projected to be 2.225 bp in MY 2012/13, down from 2.565 bp in MY 2011/12, 2.425 bp in MY 2010/11, and 3.406 bp in MY 2009/10.  Consequently, % ending stocks-to-use are projected to be 11.4% in MY 2012/13, down from 13.9% in MY 2011/12, and are projected to be down to the lowest level during the MY 2007/08 through MY 2012/13 period.

Soybean oil average prices in the U.S. are projected to be in the range of $52.50 to $56.50 per cwt for MY 2011/12.  The midpoint of the MY 2012/13 price range of $54.50 /cwt would be a record high, compared to $53.50 in MY 2011/12, $53.20 in MY 2010/11, $35.95 in MY 2009/10, $32.16 in MY 2008/09, and $52.03 in MY 2007/08.

Market price prospects for MY 2012/13 for U.S. soybean meal in general are projected to maintain but not to move markedly higher than the levels they have reached over the MY 2010/11 – MY 2011/12 period.    

Table 3. U.S. Soybean Meal Supply-Demand Balance Sheet: MY 2007/08 through MY 2012/13

   (May 10, 2012 USDA WASDE Report)

Projected U.S. total supplies of soybean meal in MY 2012/13 equal 39,900 thousand short tons or “k-st”, based on a) projected U.S. soybean meal beginning stocks of 300 k-st for MY 2012/13, b) projected production  of 39,435 k-st compared to 39,750 k-st and 39.251 k-st over the last two marketing years, and c) imports  of 165 k-st compared to 200 k-st and 179 k-st the last two years.  Projected U.S. soybean meal production in 2012/13 of 39,435 k-st is comparable to 40,300 k-st in MY 2011/12; 39,731 k-st in MY 2010/11; and 42,101 k-st in MY 2009/10 (Table 3). 

Projected U.S. domestic use in MY 2012/13 of 31,200 k-st would be up from 30,900 k-st last year, and would be the highest since 42,474 k-st in MY 2008/09.  Conversely, projected U.S. soybean meal exports of 8,400 k-st in MY 2012/13 would be down from 9,100 k-st the previous year, and the lowest amount since at least MY 2007/08.  Combined total U.S. soybean meal usage of 39,600 k-st in MY 2012/13 would be less than 40,000 k-st projected for MY 2011/12, but comparable to the range of U.S. soybean total usage of 39,381 to 42,274 k-st over the MY 2007/08 through MY 2011/12 period.  Projected U.S. soybean meal ending stocks of 300 k-st for MY 2012/13 and % ending stocks-to-use of 0.8% reflect typically minimal U.S. soybean meal ending stocks – given the perishability of the product.

Soybean meal average prices in the U.S. are projected to be in the range of $335 to $365 per ton for MY 2012/13, which is comparable to $360.00 in MY 2011/12, $345.52 in MY 2010/11, and prices in the $311-$336 range over the MY 2007/08 – MY 2009/10 time period.

Consistent growth in World soybean usage since MY 2008/09 has occurred in spite of intermittent periods of record high soybean prices during the time period (Figure 5).  The upward trend in World soybean use combined with inconsistent but generally uptrending World soybean production has led to a projected year-to-year decline or “tightening” in World soybean ending stocks in MY 2011/12.

Figure 5. World Soybean Usage & Ending Stocks: MY 2007/08 thru MY 2012/13                                         
(May 10, 2012 USDA WASDE Report)

World Soybean Supply-Demand Balances

World soybean usage has increased an average of 8.3 mmt (+3.8%) annually over the last five years (Figure 5). World soybean usage has grown from 220.9 mmt in MY 2008/09 up to 254.1 mmt in MY 2011/12, and is projected to increase again to 265.1 mmt in MY 2012/13. World soybean production has also increased over the same time period, but on a much more inconsistent basis.  After a large jump in World soybean production from 211.6 mmt in MY 2008/09 to 261.1 mmt in MY 2009/10, production moved higher to 264.7 mmt in MY 2010/11, then down to a projection of 236.9 mmt in MY 2011/12.  But in MY 2012/13 World soybean production is projected to be record high at 271.4 mmt in MY 2012/13. 

World soybean trade has followed a similar pattern to production, with lower levels of 76.9-78.4 mmt in MY 2007/08-MY 2008/09, followed by a jump to 92.9-92.6 mmt for the MY 2009/10-MY 2010/11 period, then a decline to 89.0 mmt in MY 2011/12, culminating with a sizable jump to a projected record high 97.3 mmt in MY 2012/13. 

World soybean ending stock levels have been inconsistent and variable since MY 2007/08, first declining  from 52.1 mmt to 43.4 mmt in MY 2008/09, then increasing to 60.5 mmt in MY 2009/10 and then increasing again to 70.1 mmt in MY 2010/11. Over the last two marketing years, projections of World soybean ending stocks have first declined to 53.2 mmt in MY 2011/12, and are not forecast to 58.1 mmt in MY 2012/12. In MY 2012/13 World soybean use (265.1 mmt) is projected to be less than World production (271.4 mmt), leading to an anticipated increase in World soybean supply-demand balances by 4.8 mmt, from 53.2 to 58.1 mmt (with rounding) in MY 2012/13.

Since MY 2007/08,World soybean percent ending stocks-to-use are have been 22.7% in MY 2007/08, 19.6% in MY 2008/09, 25.5% in MY 2009/10, and 27.9% in MY 2010/11, and are projected to be 20.9% in MY 2011/12 and 21.9% in MY 2012/13.  If actual World soybean production in MY 2012/13 ends up being less than this initial USDA projection, World soybean supply-demand balances could become tighter rather than less so, with World soybean prices responding to even higher levels than where they are currently.

Production of South American Soybeans

Brazil soybean production is projected to be a record high 78.0 mmt in MY 2012/13, up from 65.0 mmt in MY 2011/12, but down from the current record high 75.5 mmt in MY 2010/11.  The USDA’s projection of 65.0 mmt Brazilian soybean production in MY 2011/12 in the May WASDE report was down 1 mmt from April, 3.5 mmt from March, 7.0 mmt from February, 8.0 mmt from January, and 10 mmt from December 2011.  This decline over time reflects the process of “ratcheting down” of Brazilian soybean production prospects that has occurred in early 2012.    

Argentina soybean production is projected to be a record high 55.0 mmt in MY 2012/13, up from 42.5 mmt in MY 2011/12; from 49.0 mmt in MY 2010/11; and from the current record high of 54.5 mmt in MY 2009/10.     The USDA’s projection of 42.5 mmt Argentine soybean production in MY 2011/12 in the May WASDE report was down 2.5 mmt from April, 4.0 mmt from March, 5.5 mmt from February, 8 mmt from January, and 9.5 mmt from December 2011.  Just as for Brazil, these changes over time illustrate the process of “ratcheting down” Argentina soybean production prospects that has occurred in early 2012. 

Paraguay soybean production is projected to be 7.8 mmt in MY 2012/13, compared to 4.0 mmt in MY 2011/12; a record high of 8.4 mmt in MY 2010/11; and from 7.4 mmt in MY 2009/10.  Paraguay soybean production prospects in MY 2011/12 have also been damaged by drought, with USDA projections dropping from 5.0 mmt in March.

Exports of South American Soybeans

Brazil soybean exports are projected to be 34.2 mmt in MY 2012/13, down from a record high of 35.7 mmt of Brazilian soybean exports in MY 2011/12, 30.0 mmt in MY 2010/11, 28.6 mmt in MY 2009/10, 30.0 in MY 2008/09, 25.4 mmt in MY 2007/08, 23.5 In MY 2006/07, and 25.9 in MY 2005/06.  Projected MY 2011/12 Brazilian soybean exports were unchanged from April, but down from 36.9 mmt in March, 37.8 mmt in February, 39.0 mmt in January, and 38.5 mmt in December 2011.

Argentina soybean exports are projected to be 10.1 mmt in MY 2012/13, which is up from 8.5 mmt in MY 2011/12, 9.2 mmt in MY 2010/11, 13.09 mmt in MY 2009/10, 5.59 in MY 2008/09, and the record high of 13.84 mmt in MY 2007/08.  Projected MY 2011/12 Argentina soybean exports of 8.45 mmt were down from 8.6 mmt in April, 8.9 mmt in February-March, 9.8 mmt in January, and 10.8 mmt in December 2011.

Paraguay soybean exports are projected to be 5.1 mmt in MY 2012/13, compared to 4.0 mmt in MY 2011/12; 6.7 mmt in MY 2010/11; 5.7 mmt in MY 2009/10; 2.3 in MY 2008/09; and 4.2 mmt in MY 2007/08. 

Major Importers of Soybeans

China soybean imports are projected to be 61.0 mmt in MY 2012/13, up from 56.0 mmt in MY 2011/12, from 52.3 mmt in MY 2010/11 and 50.3 mmt in MY 2009/10.  Strength in Chinese soybean imports has been a predominant, staple demand component of the World soybean market in recent years, with China projected to account for 60.5%, 58.9%, 58.0%, and 63.7% of total World soybean imports for MY 2009/10, MY 2010/11, MY 2011/12, and MY 2012/13, respectively.  Projected Chinese soybean imports in MY 2011/12 of 56.0 mmt by the USDA in May 2012 compare to 55.0 mmt in March-April, 55.5 mmt in February, and 56.5 mmt in January 2012-December 2011.

Comments on the impact of Chinese soybean imports on World soybean production: Chinese soybean and soybean product imports have been identified as one of at least two major market factors helping to spur World soybean and soybean product market prices higher since year 2000.  In recent years, growth in Chinese soybean import demand in recent years has helped to spur increased South American soybean production (and also to higher U.S. soybean production in 2009-2010).

Other major soybean importers: The European Union (EU-27) is projected to import 11.00 mmt of soybeans in both MY 2012/13 and MY 2011/12, which compares to 12.5 mmt in MY 2010/11 and from 12.7 mmt in MY 2009/10.  Mexico is projected to import 3.5 mmt of soybeans in MY 2012/13, which compares to 3.4 mmt in 2011/12, and 3.5 mmt in MY 2010/11 and MY 2009/10.  Japan is projected to import 2.8 mmt of soybeans in MY 2012/13, which compares to 2.7 mmt in MY 2011/12, 2.9 mmt in MY 2010/11, and 3.40 mmt in MY 2009/10. 

World Soybean Ending Stocks & % Ending Stocks-to-Use

Ending Stocks of World Soybeans: The USDA projected MY 2012/13 World soybean ending stocks to be 58.1 mmt, which is comparable to 53.2 mmt in MY 2009/10, 70.1 mmt in MY 2010/11, 60.5 mmt in MY 2009/10, 43.3 mmt in MY 2008/09, and 52.1 mmt in MY 2007/08.  

% Ending Stocks-to-Use of World Soybeans: Due to varying annual World soybean production and to steady growth in World soybean usage, World soybean % ending stocks-to-use has varied from 22.7% in MY 2007/08; 19.6% in MY 2008/09; 25.5% in MY 2009/10; 27.9% in MY 2010/11; and is projected to be 20.9% S/U in MY 2011/12 and 21.9% S/U in MY 2012/13. 

Comment on Market Impact of World Soybean % S/U trends: Recent tightening of World soybean supply-demand balances in MY 2011/12 are likely to provide support for soybean markets during the spring and early summer of 2012 in conjunction with U.S. crop acreage trends and yield results in critical South America growing areas.   It is possible that if more acres of soybeans are ultimately planted in the U.S. in the summer of 2012 with a subsequently larger crop than currently forecast, that U.S. and World price prospects could be at least marginally diminished by fall 2012.  This in turn could have a moderating effect on South American farmers’ incentive to plant soybeans relative to other crops (such as corn) for harvest in 2013.