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"All of the recent strength in soybean prices is in anticipation
of sharply lower production in 2007," said Darrel Good. "Unless
the U.S. average yield falls below trend value, however, a
shortage of soybeans will not likely occur until the 2008-09
marketing year." Good's comments came as he reviewed soybean
consumption. For the current marketing year, the USDA projects
that the U.S. domestic crush plus exports of soybeans will reach
2.88 billion bushels. That projection is 194 million bushels
above use during the 2005-06 marketing year.
The USDA projects the 2006-07 marketing year crush of U.S.
soybeans at 1.78 billion bushels. That is 41 million bushels, or
2.36 percent, above the record level of crush during the
previous year.
"The Census Bureau estimates that the crush during the first
five months of the current marketing year totaled 773.28 million
bushels," said Good. "That estimate is 30.1 million bushels, or
4.05 percent, above the crush during the first five months of
the 2005-06 marketing year. The largest year-over-year increases
were in September (6.9 percent) and December (5.9 percent).
"For the most recent reporting month, January 2007, the
year-over-year increase was 2.95 percent. To reach the USDA
projection, the crush during the final seven months of the
current marketing year needs to total about 1.007 billion
bushels, only 10.8 million more than crushed during the same
period last year."
A year ago, Good added, the domestic crush was relatively
small during February, March and April but moved sharply higher
during the last four months of the marketing year.
"The domestic soybean crush is still being driven by the
demand for soybean meal," he said. "Consumption of U.S. soybean
meal from October 2006 through January 2007 was estimated at
14.875 million tons, 4.7 percent more than consumed during the
same period a year earlier.
"For the year, the USDA projects a 3.3 percent increase in
consumption of U.S. soybean meal."
Domestic use is expected to increase by 724,000 tons (2.2
percent), and exports are expected to be up by 636,000 tons (7.9
percent.)
As of Feb. 15, the USDA reported marketing year cumulative
meal exports of 2.92 million tons, 6.6 percent larger than those
of a year earlier. Unshipped sales of 2.1 million tons were 43
percent larger than those of a year earlier. The larger South
American crop now being harvested will provide increased
competition for U.S. export sales beginning in April, Good
noted.
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 "Still, with current exports plus export commitments exceeding
those of a year earlier by 19 percent, it appears that exports will
reach, or perhaps exceed, the USDA projection," he said.
Domestic consumption of soybean meal during the first quarter of
the current marketing year (beginning Oct. 1, 2006) is estimated at
about 8.8 million tons, only 1.1 percent more than used a year
earlier.
"Domestic meal use has been supported by high feed grain prices,"
he said. "However, a slowdown in livestock production and the recent
strength in soybean meal prices may result in some year-over-year
decline in domestic meal use for the remainder of the marketing
year.
"The net result of the large crush to date, along with strong
near-term export demand for soybean meal, suggests that the crush
for the year may still exceed the current USDA projection, even with
a slowdown in domestic use of meal."
While the domestic crush is being driven by meal demand,
consumption of U.S. soybean oil is on the rise. Census Bureau
estimates show a 9.4 percent increase in consumption (domestic plus
exports) during the first four months of the marketing year.
In addition, the average soybean oil yield from the 2006 crop is
down sharply from the record-high yield from the 2005 crop. For the
period October 2006 through January 2007, the average yield of oil
per bushel of soybeans crushed was 11.24 pounds, down from 11.59
during that four-month period a year ago.
"With a crush of 630.91 million bushels, the lower yield resulted
in nearly 221 million pounds less oil production than if yield had
been at the level of a year ago," said Good. "Even so, oil stocks at
the end of January 2007 were reported at a record 3.257 billion
pounds, 752 million larger than the inventory of a year ago."
For the current marketing year, the USDA projects U.S. soybean
exports at 1.1 billion bushels, 153 million (16.2 percent) more than
exported last year. Export inspections through the first 25 weeks of
the marketing year totaled 737.4 million bushels, 24.1 percent more
than cumulative inspections of a year earlier.
"To reach the USDA projections, shipments during the final 27
weeks of the year need to total 326.6 million bushels, only about 10
million more than shipped during the same period last year," said
Good. "Shipments will likely slow dramatically as the record 2007
South American crop is harvested, but total shipments are still
likely to reach the USDA projection."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences]
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