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USDA Oil Crops Outlook


14 August 2014

USDA Oil Crops Outlook - 14 August 2014USDA Oil Crops Outlook - 14 August 2014


USDA Oil Crops Outlook

U.S. Soybean Yields Rise With Favorable Weather

In its August Crop Production report, USDA published its first objective yield forecast of 2014 for soybeans at an all-time high 45.4 bushels per acre. Coupled with a record harvested area estimate of 84.1 million acres, a higher yield raises the 2014/15 soybean production estimate to a record 3.816 billion bushels. The outlook for 2014/15 soybean demand was unchanged this month. Thus, higher supplies would raise season-ending soybean stocks to 430 million bushels. The growing surplus led USDA to trim its 2014/15 forecast of the U.S. average farm price by 15 cents to $9.35-$11.35 per bushel.

The 2014/15 forecast of global soybean production was trimmed 96,000 tons from last month to 304.7 million metric tons. U.S. gains were offset by a forecast reduction in India’s soybean crop, where planting delays are expected to prevent area from exceeding 11 million hectares. Indian soybean production for 2014/15 is forecast down 600,000 tons this month to 11 million.

Domestic Outlook

U.S. Soybean Production Will Surge With Record Acreage and Yields

As of August 10, 70 percent of the U.S. soybean crop was rated in good-to-excellent condition—a level surpassed only once for this date (in 1994). Favorable growing conditions are not exclusive to one region but are widespread throughout the country. Parts of southern Minnesota and northern Iowa had below-average July precipitation but crop stress there has been minimal. Low rainfall was countered by exceptionally mild summer temperatures and adequate subsoil moisture that remained following a wet spring. Average July temperatures for the Corn Belt ranked as the second coolest since 1895. In 2009—when the region had its coolest July on record—the U.S. soybean yield had set its previous all-time high. Pod setting for soybeans is now well advanced (72 percent as of August 10) and is ideally situated to fill out with favorable soil moisture conditions.

In its August Crop Production report, USDA published its first objective yield forecast of 2014 for soybeans at an all-time high 45.4 bushels per acre. Record yields are anticipated for Illinois, Ohio, Arkansas, Louisiana, and Mississippi. Coupled with a record harvested area estimate of 84.1 million acres, a higher yield raises the 2014/15 soybean production estimate to a record 3.816 billion bushels. Total supplies edged up by 16 million bushels from last month.

The outlook for 2014/15 soybean demand was unchanged this month. Thus, higher supplies would raise season-ending soybean stocks to 430 million bushels—more than triple the expected 2013/14 carryout. The growing surplus led USDA to trim its 2014/15 forecast of the U.S. average farm price by 15 cents to $9.35-$11.35 per bushel. Declining values for soybean meal and soybean oil also led to lower season-average price forecasts for those commodities. The 2014/15 average price for soybean meal was forecast down by $10 per short ton to $340-$380. Although soybean oil prices for 2014/15 are also forecast lower (down 1 cent to 35-39 cents per pound), there is more resistance to further declines due to support by the biofuels market.

On account of recent Census Bureau revisions of 2013 data, soybean exports for 2013/14 were forecast 20 million bushels higher this month to 1.64 billion bushels. Likewise, the soybean import forecast was trimmed 5 million bushels to 80 million. Offsetting changes were made by decreasing the estimate of the 2013/14 residual, which is a measure of the unaccounted difference between total supplies and total use. Now—at -94 million bushels—the residual implies a larger-than-estimated supply. Except for a 150-million-pound increase in 2013/14 soybean oil exports (to 1.85 billion pounds), no changes were forecast this month for production and use of soybean meal and soybean oil.

Larger Peanut and Cottonseed Crops are Anticipated

The U.S. peanut crop for 2014/15 is now seen at 5.1 billion pounds—second in size only to the record 2012 harvest. USDA forecasts the national average yield at 3,964 pounds per acre, which would rank third behind only the 2012 and 2013 crops. As of August 10, 68 percent of peanuts were rated in good-to-excellent condition. Crop development in most States is ahead of the usual schedule.

Large supplies of peanuts will buoy demand throughout 2014/15. Forecast growth for domestic consumption in food is 2 percent to 2.94 billion pounds. Although strengthening competition from Argentina next year may curtail U.S. exports of peanuts, a comparatively high 1.02 billion pounds is still forecast for 2014/15. That might not be enough, though, to greatly reduce season-ending stocks, which are expected to hover around 2 billion pounds.

U.S. cottonseed production for 2014/15 is forecast to increase 37 percent from 2013/14 to 5.8 million short tons. Most of this year’s increase can be attributed to a lower rate of acreage abandonment for cotton. In Texas and Oklahoma, crop conditions have markedly improved since spring and farmers are more likely to bring crops to harvest. Estimated harvested acreage for cotton increased to 10.2 million acres from 9.7 million last month. Cottonseed prices are anticipated to grow considerably less expensive, so demand will rebound. Cottonseed crushing for 2014/15 is seen expanding by 25 percent to 2.5 million short tons, while feed use could swell 27 percent to 2.85 million tons.

International Outlook

Late Arrival of Rainfall Curtails Indian Soybean Area

The 2014/15 forecast of global soybean production was trimmed 96,000 tons from last month to 304.7 million metric tons. U.S. gains were offset by a forecast reduction in India’s soybean crop. A larger U.S. carryout for 2014/15 may still swell global ending stocks to 85.6 million tons.

In India, delayed monsoon rainfall this year has greatly shortened the planting season for soybeans. By August 7, Indian farmers had sown 10.3 million hectares of soybeans, compared to 11.9 million a year earlier. While current moisture levels are much improved, the delays have left only 1-2 weeks before it is unfeasible to plant soybeans there. Since monsoon rains normally withdraw from central India by October, crop yields for soybeans planted after August diminish sharply with the abbreviated moisture period. Many producers have already switched to sowing cotton, which has a longer window for planting.

This year’s planting delays are expected to prevent Indian soybean area from exceeding 11 million hectares. The area estimate is down 600,000 hectares from last month. On this basis, Indian soybean production for 2014/15 is forecast down 600,000 tons this month to 11 million. Consequently, the country’s soybean crush for 2014/15 is forecast 550,000 tons lower this month to 9 million. Lower output of soybean meal may then reduce Indian exports next year by 400,000 tons to 3 million. Indian consumption of soybean oil would also be curtailed, but could be offset by rising imports of sunflowerseed oil.

Better European Rapeseed Yields Counter Canadian Area Losses

Global rapeseed production for 2014/15 is forecast 200,000 tons higher this month to 70.4 million. Higher yields for the EU, Ukraine, and China are offsetting a lower area estimate for Canada.

Although it was quite wet throughout Europe in July, rapeseed harvesting is advancing well. EU crop yields are very good and USDA raised its production forecast this month by 250,000 tons to 22.65 million tons. A better yield outlook for France, Romania, and Bulgaria is primarily responsible for this month’s increase. Higher domestic rapeseed supplies could trim EU imports in 2014/15 to 2.8 million tons from 3.45 million in 2013/14. Limited prospects for growth in the EU rapeseed crush are also likely to cause season-ending stocks to accumulate.

Similarly, the Ukraine rapeseed crop for 2014/15 is expected to be very good. Despite a 15-percent decline in Ukraine rapeseed area this year, excellent yields are seen boosting production by 200,000 tons this month to 2.2 million. The fall-sown crop emerged largely unscathed from harsh winter weather while spring moisture conditions were favorable for reproductive development. Despite a smaller crop than last year, Ukraine rapeseed exports are forecast to remain high at 1.9 million tons. Ukraine rapeseed supplies will be highly price competitive in the export market after a 55-percent depreciation of its currency this year. Also, Ukraine’s trade prospects within Europe were enhanced in July with ratification of an agreement to liberalize market access for all goods—including agricultural commodities.

Global rapeseed trade may shrink in 2014/15 as the leading importing countries have improved domestic crops. The biggest impact of larger EU and Ukraine rapeseed crops may be on exports from Australia, which are forecast 200,000 tons lower this month to a 4-year low of 2.45 million tons. In addition, lower rapeseed imports for China will likely deter Australian shipments. China rapeseed imports for 2014/15 are forecast 300,000 tons lower this month to 3.2 million due to an increase in domestic supplies. Good growing weather pushed China rapeseed yields for 2014/15 to an all-time high, which boosted production to a record 14.7 million tons.

In Canada, June flooding in the Prairie Provinces is expected to reduce harvested area for canola by 300,000 hectares this year to 7.7 million. Canola fields that avoided flooding are doing very well but the washed-out croplands reduce the 2014/15 production forecast for Canada by 450,000 tons this month to 15.25 million. Total supplies in Canada are reduced even further due to smaller expected carryover stocks. Strong exports this spring reduced the expected stocks carryout for 2013/14 to 2.5 million tons from the previous estimate of 3.1 million. That reduction contributes to a lower forecast for 2014/15 ending stocks at 2.3 million tons.

Published by USDA Economic Research Service

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