The latest World Agricultural Supply and Demand Report from USDA offered little change for the domestic soybean crop, but did bring significant cuts to the South American crop.
Mac Marshall, United Soybean Board vice president of market intelligence, says the report is typical for this time of year.
“No major changes on the U.S. balance sheet. The big figure there is that cut to Argentine soybean production. Last month, we saw a cut from 41 million to 33 million metric tons — and now the subsequent cut of six million metric tons — it is pretty staggering in magnitude, but it does also bring the expected production closer to what some local market estimates have put it at. But all in all, it’s really testament to how much production in Argentina has suffered this year due to La Nina.”
Meanwhile, crush capacity in the United States is expanding due to the growing demand for soybean oil, bringing additional crush for feedstuffs — a move Marshall calls exciting for the future.
“The market has reevaluated oil over the last couple of years, and while the prices for oil aren’t what they were maybe several months ago, still, its value contribution to soy complex is more than it’s been in the past. And so that’s been driving crush expansion that’s been a little bit more incentivized by oil. So, what that means is increased meal production in the years to come. The first wave of those plants is expected to come online this next marketing year, so that’s what’s exciting to see in terms of new crush coming online.”
Marshall adds the impact of the increased crush capacity should show up in the next WASDE report, which will preview the new crop year.
“We might see some impact or uptick in crush resulting from having new capacity come online. But again, announcements are not capacity and capacity is not actual use or production, so bear that in mind. It’s an exciting trend that we’re seeing where we can have this crush expansion, that certainly means more access to points of delivery, smaller basis for some farmers in historically underserved parts of the country. So, it’s incredibly exciting, and it does, I think, lead to a notable shift in what could potentially be our meal supply and opportunities for domestic animal ag producers, as well as buyers of meal around the world.”
Keep up with the latest news from the United Soybean Board at unitedsoybean.org and Wednesday mornings at 10 a.m. Eastern / 9 a.m. Central on RFD-TV.