WASHINGTON – The USDA forecasts 2006/07 soybean meal exports up modestly to a five-year high of 7.75 million short tons. That strength should be encouraged by a growing supply of soybean meal and a moderate increase in domestic use to 34.1 million tons.
USDA expects that 2006/07 world oilseed production will experience a negligible 0.2 percent decline. For soybeans, global output is projected at 222 million tons, a slight increase over the current season.
U.S. carryover. Dwarfing the production change, however, would be an 8.4 million ton increase in the U.S. carryover of soybean stocks, likely accounting for 91 percent of the entire increase in world supply.
The U.S. share of the export market is forecast expanding from 37 percent to 42 percent, where the difference is seen coming mainly at the expense of market share for Brazil.
Domestic outlook. If U.S. producers carry through on their planting intentions, U.S. soybean acreage would be a record-high 76.9 million acres.
The strength of the export market should be encouraged by growing soybean meal supplies and a steady rate of domestic use.
Annual growth in domestic consumption is projected at 2 percent to 34.1 million tons. For 2005/06, domestic disappearance of soybean meal has been even weaker, and could conclude at 0.5 percent lower for the marketing year to 33.4 million tons.
Exports could help. Through the next several months, however, crushing should retain some support from comparatively large outstanding export sales of soybean meal, the USDA reports.
The 2005/06 export forecast for soybean meal was raised 200,000 tons to 7.15 million. The minimal changes to supply and use left the 2006/07 price forecasts for soybeans ($5.10-$6.10 per bushel), soybean meal ($155-$185 per short ton), and soybean oil (22.5-26.5 cents per pound) unchanged.
International. USDA expects that 2006/07 world oilseed production will experience a negligible 0.2 percent decline to 389.4 million metric tons. Modest reductions in rapeseed, sunflowerseed, and peanut crops may barely offset small gains for soybeans and cottonseed.
World ending stocks could rise by 2 million to 57.5 million tons, to be absorbed almost entirely where the gains originated – within the United States.
For soybean meal, 2006/07 global exports are projected nearly 3 percent higher to 50.0 million tons, with most of the gains divided between Argentine and U.S. processors.
Domestic consumption of soybean meal, which is projected 2.5 percent higher to 9.4 million tons, is also being weighed down by a slowing demand for the country’s poultry exports.
Argentina is hot. The relative profitability of growing soybeans in Argentina has encouraged continued expansion of its crop area through a conversion of pasture. More producers are also adopting the practice of intercropping soybeans with wheat, which entails sowing soybeans directly into the growing wheat crop.
With a likely rebound in 2006/07 wheat area, more intercropping could allow continued growth in soybean area with a minimal detriment to overall yields.
Argentine soybean area is projected up 3 percent to 15.4 million hectares. Good logistics for the Argentine processing sector and the export tax differential between soybeans (23.5 percent) and soybean products (20 percent) ensure a robust pace of crushing.
The soybeans that are exported from Argentina go primarily to China, a country that imports relatively little soybean meal from anywhere.
Giant awakes. For China, tighter domestic supplies of soybeans and rising consumption could boost 2006/07 imports sharply.
Generally superior production incentives for raising corn in China are seen squeezing the country’s 2006 soybean area down by 1 percent to 9.4 million hectares.
The domestic soybean harvest is expected to dip to 16.9 million in 2006, a figure well short of the country’s consumption.
China’s feed needs. Over the next year, feeding of poultry in China is likely to recover slowly from high-pathogenic avian influenza, although expanding swine and beef production has already countered its overall impact on protein demand.
Soybean meal consumption growth for China is forecast up 9 percent next year to 29.5 million tons, more rapidly than anywhere else in the world.
Total protein consumption in China will soon rival use in the European Union (EU-25) and the United States.
Processors would need to import approximately 31.5 million tons of soybeans next year to service that level of feed demand and maintain stocks, up from the 2005/06 forecast of 27.5 million.
In 2006/07, China alone could dominate as much as 83 percent of the growth in world soybean imports and 45 percent of the entire volume of international trade.
European front. In Europe, the market trend for soybeans appears headed the opposite way to that of the dynamic China market. Rapeseed meal and sunflowerseed meal may account for nearly all of the 2006/07 growth in protein meal consumption, and flatten out the use of soybean meal to around 32.6 million tons.
Still by far the world’s largest import market for soybean meal, EU-25 imports could slow to 22.7 million tons from 22.5 million in 2005/06.
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