The U.S. Department of Agriculture (USDA) has significantly lowered its forecast for U.S. soybean production in the 2024/25 marketing year, according to the latest Oil Crops Outlook report released on November 13, 2024. The reduction, driven by lower yield estimates, is expected to have far-reaching implications for global soybean markets and prices.
Key highlights from the report include:
- U.S. soybean production for 2024/25 is now estimated at 4.5 billion bushels, down 120.7 million bushels from the previous forecast.
- The national average soybean yield has been reduced to 51.7 bushels per acre, a 3% decrease from last month's projection.
- Global soybean production for 2024/25 is forecasted at 425.4 million metric tons, 3.5 million metric tons lower than last month's estimate.
- U.S. soybean exports are projected to decrease, while Brazil's exports are expected to reach a record high of 105.5 million metric tons.
- Domestic soybean crush estimates have been lowered by 15 million bushels to 2.4 billion bushels.
The reduction in U.S. soybean yield forecasts affects several major soybean-growing states, including Illinois, Iowa, Kansas, Kentucky, Minnesota, Missouri, Mississippi, South Dakota, Tennessee, and Wisconsin. This widespread impact underscores the challenges faced by farmers during the growing season, likely due to weather-related issues.
Despite the lower production estimates, the USDA has maintained its 2024/25 U.S. season-average soybean price forecast at $10.80 per bushel. However, the tightening supply situation could put upward pressure on prices in the coming months.
The global soybean market is also feeling the effects of the U.S. production shortfall. While the USDA has increased its forecast for global soybean trade, primarily due to higher exports from Brazil, Canada, and Benin, the overall reduction in global ending stocks points to a tightening market. Global soybean ending stocks for 2024/25 are now projected at 131.7 million metric tons, down 2.9 million metric tons from last month's forecast.
In related news, the report highlights a significant trend in the canola market, particularly in its use for biofuel production. Canola oil use in biofuels reached 440 million pounds in August 2024, a 58% increase compared to the same month in 2023. This surge in demand is expected to continue, with the USDA forecasting canola oil use in biofuel production to increase to 5.0 billion pounds in the 2024/25 marketing year.
The increased use of canola oil for biofuels is having a notable impact on the overall canola market. Canola exports are projected to rise by nearly 100 million pounds in 2024/25, driven by strong shipments in the first quarter of the marketing year. However, this increased demand is putting pressure on canola oil stocks, which reached their lowest level since 2003/04 at the end of the 2023/24 marketing year.
Industry experts are closely watching these developments, as they could have significant implications for both soybean and canola markets. The reduced soybean production in the United States, combined with increased demand for canola oil in biofuels, may lead to shifts in planting decisions and trade flows in the coming years.
