From the June low to the September peak, January 2013 soybean
futures increased by 43 percent, January soybean meal futures
increased by 51 percent, and January soybean oil futures gained 20
percent. Soybean oil futures are now back to the level of early
June, while soybean futures are 13 percent above the early June
level and soybean meal futures are 21 percent higher.
"For the 2012-13 marketing year, the USDA expects soybean oil
prices to remain weak relative to soybean meal prices," Good said.
"The price of crude oil at Decatur, Ill., is expected to average
2.26 times the price per pound of 48 percent protein meal. The ratio
of average prices was 3.08 during the 2010-11 marketing year and
2.64 last year. In nominal terms, the average price of soybean oil
is projected in a range of $0.51 to $0.55 per pound, compared to an
average of $0.519 last year and $0.532 during the 2010-11 marketing
year. On the other hand, the average prices of soybeans and soybean
meal are projected to be substantially above the averages of the
previous two years," Good said.
Good said that the relative low price projection for soybean oil
reflects prospects for weaker demand than forecast for soybean meal.
"Soybean oil exports during the current marketing year are
projected at 1.2 billion pounds, compared to 1.464 billion pounds
exported last year and exports of 3.233 billion pounds in 2010-11,"
Good reported that the U.S. soybean oil exports are expected to
be limited by an increase in palm oil exports and by competition
from larger Argentine exports of soybean oil during the last half of
the marketing year. While exports during the current marketing year
are expected to be down by nearly 14 percent from exports of a year
ago, shipments and sales have been relatively large early in the
marketing year. Shipments during the first seven weeks of the
marketing year were more than 3.5 times larger than the very slow
pace of a year ago. Unshipped sales as of Nov. 15 were 2.8 times
larger than unshipped sales on the same date last year.
"The large early export pace is supported by the small South
American soybean harvest earlier this year and will likely slow
after the first of the year as confidence in the 2013 South American
crop increases," Good said. "The prospects for very small
inventories of U.S. soybean oil by the end of the marketing year,
however, underscore the importance of a rebound in South American
Domestic consumption of soybean oil for purposes other than
biodiesel during the current marketing year is projected at 13.1
billion gallons, 310 million gallons less than consumed last year.
Consumption is expected to be limited by larger supplies and
consumption of other vegetable oils, particularly cottonseed oil and
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The consumption of soybean oil and all other fats and oils for
methyl ester (biodiesel) production has not been reported by the
Census Bureau since July 2011, Good said. The USDA’s World Outlook
Board indicated that it relies on data reported by the U.S. Energy
Information Administration to estimate the amount of soybean oil
used for biodiesel production.
"Biodiesel production totaled 723.3 million gallons during the
2010-11 marketing year and 928.9 million gallons during the first 10
months of the 2011-12 marketing year," Good said. "The estimate for
August 2012 will be available on Nov. 28. Production for the
marketing year may be near 1.13 billion gallons. For the 2011-12
marketing year, the USDA estimates that 4.9 billion pounds of
soybean oil were used for biodiesel production, up from 2.737
billion pounds in the previous year. That estimate implies that
soybean oil accounted for about 57 percent of the feedstock used in
the production of biodiesel, compared to about 50 percent in the
previous year," Good said.
For the current marketing year, Good said that the USDA also
projects soybean oil consumption for the production of biodiesel at
4.9 billion pounds. However, the EPA has increased the minimum
amount of domestic biodiesel consumption from 1 billion gallons in
2012 to 1.28 billion gallons in 2013. The increase of 280 million
gallons will require about 2.1 billion pounds of additional
feedstock if biodiesel trade remains at the same level as in 2012.
"Biodiesel production could also exceed the minimum requirement
in order to meet the advanced and total biofuel mandate for the
year," Good said. "The USDA projection of soybean oil consumption
implies that most of the increase in biodiesel production in the
2012-13 marketing year will come from feedstock other than soybean
oil. Alternatively, soybean oil consumption will exceed the current
"In the first eight weeks of the 2012-13 marketing year, soybean
oil prices averaged 48 cents per gallon, well below the USDA
projection for the year," Good said. "With demand potentially
stronger than currently projected, the increase in prices that began
two weeks ago is likely to be extended. Unless the biofuels mandate
is amended, price strength could extend well into the future," he
[Text from file received from the
University of Illinois College of Agricultural, Consumer and