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USDA Oilseed: World Markets and Trade


17 November 2014

USDA Oilseed: World Markets and Trade November 2014USDA Oilseed: World Markets and Trade November 2014


USDA Oilseed: World Markets and Trade

U.S. soybean meal export commitments (accumulated exports plus outstanding sales) reached a new record in the first month of the 2014/15 marketing year. By the end of October, commitments were 25 percent higher than last year and on track to blow past last year’s record exports. Total exports are forecast at 11.6 million tons in this year. Although October exports were slightly below last year due to limited on-site processor soybean stocks that reduced initial crush volume, outstanding sales were a third higher. Lower soybean meal prices, down nearly 20 percent from last year, have spurred additional sales, particularly to Southeast Asia and Mexico. Expected weak Indian meal exports and limited crush expansion in Argentina due to slower producer selling are also boosting U.S. sales.

Higher Transport Costs Add to Producer’s Concerns

In early October, cash soybean prices in Central Illinois hovered near $325 per ton ($8.85/bu), a whopping 30 percent below last year. While current price levels have improved with a pick-up in demand, they still remain close to 20 percent below a year ago. Despite better yields and added acres this year, producers are expecting reduced revenues due to the lower prices.

While a larger supply situation has been the primary factor in this year’s lower farm gate prices, higher transportation costs are contributing as well. The price spread between the Gulf prices and those at the local elevator is largely a measure of the shipping costs between the producer and the terminal market. Typically, in a buyers’ market, as is the case this year, producers must absorb a greater share of transport and logistical expenses in order to remain competitive, adding to the lower farm-gate prices. The current price spread, while initially nearly 40 percent larger than last year, has narrowed in recent weeks, yet remains significantly above last year and close to double the levels in 2011 and 2012 when production and shipping volumes were lower. This year’s record corn and soybean production has taxed limited barge and rail capacity, pushing rates higher. Additionally, an improving economy and growing demand for rail has contributed to the higher transport costs.

OVERVIEW

Global soybean production is higher on larger crops in the United States.Soybean trade is up slightly on U.S. exports. Soybean meal trade is virtually unchanged as larger U.S. exports are mostly offset by lower Argentine exports. The U.S. season-average farm price is unchanged.

SOYBEAN PRICES

U.S. export bids, FOB Gulf, in October averaged $416 per ton, down $8 from last month, pressured by this year’s record crop. As of the week ending October 30, 2014/15 U.S. soybean commitments (outstanding sales plus accumulated exports) to China totaled 22.2 million tons compared to 21.1 million a year ago. Total commitments to the world are 35.6 million tons, compared to 33.2 million for the same period last year.

Published by USDA Foreign Agricultural Service

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