Fundamentally Speaking

World Oilseed Supplies at All-Time High

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

Ongoing wet weather in much of the key U.S. growing regions has popped soybean futures little more than a week after the new crop contracts had scored contract lows.

Concerns over wetness center on the still sizable six million acres of intended ground left to plant as of this past Sunday with Kansas, Missouri and Illinois having the largest areas left to seed.

For the crops already in the ground, heavy rains have resulted in the yellowing of the plants and less developed root systems that could be a pressing concern should conditions turn dry and the soybean plants are not able to tap into what should be abundant subsoil moisture supplies.

Consequently, the trade's thinking on 2015/16 ending soybean stocks have shifted form 500 million bushels or higher to perhaps less than 400 million bushels.

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The USDA's last estimate of this year's U.S. soybean carryout is 330 million bushels, down 20 million from their prior projection and based on a large export sales still on the books and healthy crush margins the 2014/15 stocks could edge down to 300 million bushels or thereabouts.

This could pare next year's stocks currently pegged at 475 million bushels, especially if U.S. planted acres and yields come in below the 84.6 million and 46.0 bushel per acre already projected by the USDA.

End-users can calm themselves realizing that even with excess moisture resulting in less intended planted area, the June 30th Acreage report may capture back some of the 2-3 million acres that supposedly were not accounted for when the USDA released its Prospective Plantings report back in March.

The fact is that unless domestic soybean harvested acres and yields are well below USDA projections, it will be difficult for the U.S. not to have the highest soybean stocks or stocks to use rations in ten years.

Meanwhile the accompanying graphic shows global and foreign oilseed stocks at the highest level ever and the world oilseed stocks-to-use ratio is the loftiest in history.

This is linked to a third straight year of record South American soybean output and new peaks on global rapeseed production.

These supplies should result in intense export competition for U.S. soybeans and products, especially with indications that Chinese oilseed demand may cool from the feverish pace seen in recent years based on a declining hog population and flagging economic growth.

(KA)

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andrew mohlman
6/24/2015 | 5:00 PM CDT
End users look closer production close to usage. who thinks usda is right anyway?