TheCropSite.com- news, features, articles and disease information for the crop industry

USDA Oil Crops Outlook


15 October 2014

USDA Oil Crops Outlook - 15 October 2014USDA Oil Crops Outlook - 15 October 2014


USDA Oil Crops Outlook

Soybean Prices Depressed by Historically High Supply

In its October Crop Production report, USDA raised its U.S. soybean yield forecast for this year to 47.1 bushels per acre. However, U.S. soybean acreage was 655,000 acres lower than indicated in the June Acreage report. The combination of a higher yield forecast and lower acreage resulted in an increase in 2014/15 soybean production by 14 million bushels to 3.927 billion. But the 2014/15 soybean supply is lowered 24 million bushels by a smaller carryover. Coupled with unchanged use, the expected increase in season-ending stocks is trimmed to 450 million bushels. USDA’s forecast of the 2014/15 U.S. average farm price was unchanged at $9.00-$11.00 per bushel.

The 2014/15 forecast of global soybean production inched up 76,000 metric tons from last month to 311.2 million. Forecast production gains for the United States and European Union exceeded reductions for China and Russia. China soybean production for 2014/15 is seen 200,000 tons lower this month to 11.8 million as a summer drought in the North China Plains caused yield losses.

Domestic Outlook

Soybean Yield Increase Offsets Reduced Acreage

USDA’s October Crop Production report indicated the 2014 soybean yield at a record 47.1 bushels per acre, up from 46.6 bushels last month. For the Midwest and Mississippi Delta regions, nearly ideal growing conditions were established for soybeans last summer with below-average temperatures and above-average rainfall. In addition, the absence of a killing frost into early October allowed crops to fully mature. This month, yield increases for Indiana and South Dakota had the largest impact on production.

However, yield increases in other States were countered by reductions in acreage. Based on surveys, remote sensing, and administrative data, USDA lowered estimates of U.S. planted and harvested acreage for soybeans to 84.2 million acres and 83.4 million acres, respectively. U.S. soybean acreage was 655,000 acres lower than indicated in the June Acreage report. The combination of a higher yield forecast and lower acreage resulted in an increase in 2014/15 soybean production by 14 million bushels to 3.927 billion.

Smaller Carryover Could Moderate Season-Ending Soybean Stocks

Although soybean use in the fourth quarter of 2013/14 dramatically slowed from the third quarter, it did not prevent year-ending stocks from falling to a historically tight level. USDA’s Grain Stocks report indicated that September 1 soybean stocks totaled 92 million bushels. September soybean stocks declined from 141 million bushels a year earlier and were the lowest season-ending inventory since 1973. On a stocks-to-use basis, 2013/14 ending stocks dropped to an unprecedented low of 2.6 percent—or less than a 10-day supply. This data led USDA to revise its final 2013/14 production estimate for soybeans by 69 million bushels to 3.358 billion. Upward revisions for harvested area (384,000 acres to 76.25 million) and yield (to 44 bushels per acre from 43.3 bushels previously) were responsible for last year’s larger crop.

While the low late-summer soybean inventory explains a strong price rally into mid-August, it does not materially alter the 2014/15 supply outlook. Total soybean supplies for 2014/15 are estimated at 4.034 billion bushels—up 13 percent from 2013/14. However, the expected supply slipped 24 million bushels from last month’s forecast as the reduction in beginning stocks more than offset the gain in new-crop production.

Lower 2014/15 soybean supplies and unchanged use are expected to trim the increase in season-ending stocks to 450 million bushels, down 25 million from last month’s forecast. USDA’s forecast of the 2014/15 U.S. average farm price was unchanged at $9.00-$11.00 per bushel. With just 20 percent of the country’s 2014 soybean crop harvested through October 5, a collapse in cash market prices has already begun. October cash bids in the Upper Midwest have slipped below $9.00 per bushel, well below a peak near $15 last spring. At the same time, the price spread with Gulf ports is now wider than usual. According to USDA’s Agricultural Marketing Service, barge rates on the Mississippi River system are currently at an all-time high. Railcar rates have soared, too, reflecting a strong demand outlook and prior disruptions of rail service. The Energy Information Administration reports that rail shipments of domestically produced petroleum have doubled since 2012, which has squeezed the availability of locomotives to transport crops. The combination of shipping bottlenecks with record corn and soybean crops will lead to heavy demand for farm and off-farm crop storage this fall. Cash prices for soybeans will be under intense pressure until the shipping and storage constraints are eased.

Recovery in Sunflowerseed Production Seen With Record Yields

Growing conditions for other U.S. oilseed crops have been favorable this year as well. USDA forecasts 2014/15 sunflowerseed production to rebound to 2.45 billion pounds—a 21-percent increase from last year. Nearly all of this year’s production increase can be attributed to an excellent yield, which at 1,626 pounds per acre topped an all-time high. Sown acreage is virtually identical to last year, with higher non-oil-type sunflowerseed offsetting a decrease in oil-type acreage. Sunflowerseed production gains may be divided almost evenly between oil-type and non-oil-type varieties. Sunflowerseed harvesting was just getting started in October.

However, lower beginning stocks could moderate the year-to-year increase in total supplies to 11 percent. Compared to a year earlier, September 1 sunflowerseed stocks fell 41 percent to 201 million pounds. A larger supply is expected to edge up the sunflowerseed crush to 1.1 billion pounds from 1.02 billion in 2013/14.

U.S. canola production in 2014/15 is forecast at a record 2.5 billion pounds based on near-record acreage (1.71 million acres) and an above-trend yield (1,622 pounds per acre). Canola yields for top-producing North Dakota are expected to be the third highest ever. In contrast, winter canola yields in western Oklahoma were slashed by an untimely dry spell during the crop’s March-May flowering and reproductive period. Thus, there was a larger moderating influence on national production given the expansion of Oklahoma acreage this year.

Despite a bumper domestic canola harvest this year, near-record U.S. imports (2 billion pounds) are still anticipated due to recent expansion of crushing capacity. Also favoring imports is a depreciation of the Canadian dollar, which has lost 5 percent of its value against the U.S. dollar since July. The canola crush for 2014/15 is forecast at a record 4 billion pounds. Prospects for record high canola supplies have sent cash prices tumbling to $16-$16.50 per hundredweight by early October, compared to $21 a year earlier. 

International Outlook

Global Soybean Supplies Edge Up With Higher U.S. and EU Crops

The 2014/15 forecast of global soybean production inched up 76,000 metric tons from last month to 311.2 million. Forecast production gains for the United States and European Union exceeded reductions for China and Russia. Global soybean stocks for 2014/15 could surge to 90.7 million tons compared to 66.5 million for 2013/14. Brazil and Argentina may together account for more than half of that increase in stocks while the United States would account for 40 percent.

China soybean production for 2014/15 is seen 200,000 tons lower this month to 11.8 million as a summer drought in the North China Plains caused yield losses. However, good yields in Heilongjiang—China’s major soybean growing region—tempered this year’s output decline. China’s smaller domestic crop is not considered to greatly influence the growth of soybean imports, which are forecast unchanged this month at 74 million tons. However, a reduced crop could limit an increase in season-ending stocks.

Soybean harvesting in Russia’s Far East region is nearly done. Government data on the harvest have shown that prior expectations of crop yields were optimistic. The 2014/15 soybean crop for Russia was lowered 200,000 tons this month to 2.5 million. The reduction is expected to curb soybean exports from Russia.

Dryness Curtails Russia Sunflowerseed Yields

The 2014/15 forecast of global sunflowerseed production was trimmed 284,000 tons from last month to 40.2 million. Lower crop estimates for Russia and Argentina offset smaller gains for the European Union and Turkey.

Russia’s Ministry of Agriculture reported that 58 percent of the sunflowerseed harvest was completed by October 6. Observed yields are turning out lower than anticipated. A warm and dry August, particularly in southern Russia, harmed reproductive development of the crop. USDA lowered its forecast of 2014/15 sunflowerseed production to 9.5 million tons from 9.8 million last month. Despite a lowering of the 2014/15 crush forecast by 200,000 tons to 9.1 million, the outlook for Russian processors may be only modestly dimmer than last year’s record at 9.3 million.

In contrast, the yield outlook for sunflowerseed in Bulgaria, Romania, and Hungary benefited from a cool and wet August. As a result, the forecast of EU production increased to 8.6 million tons from 8.4 million last month. EU sunflowerseed crush is forecast modestly higher, although most of the production increase may raise season-ending stocks. Bordering the Balkan region is Turkey’s primary sunflowerseed-growing region in Thrace. Unlike other parts of Turkey, irrigation in this region is limited, and rainfall is a crucial determinant of yields there. This year, April-September precipitation was 50-100 percent above average. So, despite lower Turkey sunflowerseed area in 2014/15, a record high yield raised the production forecast by 50,000 tons this month to 1.2 million. The domestic crop still falls well short of consumption needs, so Turkey will remain the top importer of sunflowerseed in the world.

Argentine sunflowerseed area for 2014/15 is seen 100,000 hectares lower this month to 1.4 million hectares on account of less sown area in northern regions. Nearly one-quarter of the crop was sown by October 9, with planting just starting for the main growing region in southern Argentina. Thus, forecast sunflowerseed production for the country was trimmed 200,000 tons this month to 2.5 million, with the entire reduction likely preventing an increase in season-ending stocks.

Adverse Harvest Weather in Canada Trims Crop Yields

Global rapeseed production for 2014/15 was forecast 384,000 tons lower this month to 70.3 million as a reduction for Canada exceeded a larger EU crop estimate. USDA pared its 2014/15 canola production forecast for Canada by 300,000 tons this month to 14.4 million. The growing season ended on September 11th for most of the Canadian prairies when a hard freeze arrived. That killing frost came about 10 days earlier than usual. No crops that had been already cut into swaths or harvested were harmed. But for fields still standing, the cold weather can diminish quality. In addition, subsequent wet weather (including snow in some cases) delayed harvest progress and possibly curtailed yields. Under these conditions, there is a higher risk of the pods shattering, which makes it impossible to harvest the seed scattered on the ground. Recent weather has been drier so that the harvest is now concluding. Supply losses may reduce season-ending stocks in Canada to 1.4 million tons, compared to 2.4 million in 2013/14.

Published by USDA Economic Research Service

DOWNLOAD REPORT:- Download this report here

Share This


Related Reports

Reports By Country

Reports By Category

Our Sponsors