US soybean 2022-23 output expected at record-breaking 125 million mt

US soybean output for the marketing year 2022-23 (September-August) is expected to reach a record high 125 million mt on the back of an all-time high acreage forecast, market analysts said, which is likely to ease supply concerns.

According to the US Department of Agriculture’s March 31 forecast for 2022-23 planting intentions, soybean acreage is set to rise to an all-time high 91 million acres, with a sizable acreage shift from fertilizer-intensive corn.

The trendline for US soybean yield has hovered around 51.5 bushels/acre in recent years, analysts say. So, if the yield trendline holds steady in MY 2022-23, coupled with 91 million acres of planting area, a record beans harvest of little over 125 million mt is very likely, they said.

With substantial output expectations, soybean basis prices have retreated on bearish sentiment since the release of the USDA’s planting intentions report.

S&P Global Commodity Insights assessed SOYBEX FOB New Orleans at $647.88/mt March 31, down 15 cents on the day, while SOYBEX FOB Santos was estimated at $646.81/mt, down 18 cents day on day.

Notwithstanding the minor dip in prices in recent days, the overall price levels have remained fairly high compared with the last few years.

Since the SPCI price assessments began on July 31, 2018, when SOYBEX FOB Santos was assessed at $418.07/mt, the prices had skyrocketed to $634.87/mt as of April 1 amid tightening South American supplies and strong global demand for the oilseed and its products.

The world’s top beans importer — China — has played a major role in this price hike over the years.

According to the USDA’s Foreign Agricultural Service report March 15, soybean demand from China is forecast to reach a record 100 million mt in MY 2021-22, reflecting a steady recovery in feed demand from the livestock and poultry sectors.

Ever-rising fertilizer prices have also been a big reason in tilting farmers’ preference toward soybeans and away from corn in MY 2022-23, analysts say.

Fertilizer prices have been soaring to record levels on robust demand and the ever-tightening supply situation, especially since the Russian invasion of Ukraine.

Tampa ammonia soared to a record $1,625/mt for April, up 43% on the month, while diammonium phosphate or DAP prices at NOLA spiked to $980-$1,010/st, the highest level since 2008.

According to analysts, as the fertilizer price indices hit record highs, the input cost pressure on corn planting will be markedly higher than for soybeans in 2022. As a result, a notable shift in planting decisions in favor of soybeans is highly expected when the next planting window opens in May.

As fertilizer costs account for almost 40% of the operating cost for US corn farmers each year, it is expected that a sizable number of US farmers might opt for soybeans planting, analysts say.

The USDA’s latest planting intention report supports this, as corn planting sentiment plummeted.

The corn acreage forecast for MY 2022-23 is nearly 4 million acres lower on the year at 89.5 million acres, and a four-year low, the USDA report said.

Although, a record MY 2022-23 US soybean harvest is expected, all the expectations are pinned on the hope that weather remains normal between May and August.

In the past few years, weather has played a decisive role in the global soybean supply.

The world’s largest soybean producer and exporter Brazil’s beans output for marketing year 2021-22 (January-December 2022) has already been trimmed from early season estimates of a record 145 million mt to nearly 122 million mt due to prolonged drought.

Last year, the US soybean farmers in the western Corn Belt — a top soy and corn producing region — suffered the same fate of extreme dry conditions. As a result, substantial cuts were made in the output estimates.

Meteorologists predict an overall normal weather in the Corn Belt this year. But there are signs that the western parts of the region could face heat stress again.

Dryer-than-normal soil moisture has already been seen in the states of Kansas, Nebraska, South Dakota, Iowa, Wisconsin and Minnesota, according to the USDA’s latest drought monitor map.

Dry soil conditions this early does not bode well for the soybean yield. However, there is still some time left before the US soybean planting begins in full swing in May and favorable rains could boost the moisture and yield by then.

So for market participants, weather will again be the needle that will move sentiment until the end of August.

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Tags: China, prices, soybean, US, yield, acreage, output, импортер, record, fertilizer