Beginning with the 2019/20 old-crop soybean supply/demand balances, the U.S. Department of Agriculture (USDA) lifted its forecast for ending stocks to 580 million bushels from its April forecast at 480 million. While that remains far below last year’s record high of 909 million bushels, it comes in well above trade expectations for a more modest increase of 501 million. The National Agricultural Statistics Service’s (NASS) resurvey of growers with late harvested soybeans trimmed the 2019 crop by 1 million bushels. Its major use components are exports, which USDA now projects at 1,675 million versus 1,775 million in April and the crush, which was unchanged from the April forecast of 2,125 million. The lower adjustment on exports was dictated by the slower than expected pace of Chinese purchases following the Phase One trade agreement. A far less vital change was the agency’s reduction in residual usage of 1 million bushels reflecting changes from updated December 1 stocks. USDA forecasts the 2019/20 farm price at $8.50, and that compares to $8.65 last month and is nearly equal to $8.48 last year.

USDA initiates its new-crop forecasts in the May World Agricultural Supply and Demand Estimates (WASDE). USDA uses the March planting intentions report to establish its planted area estimate of 83.5 million acres. The agency looked at the previous 5-year ratio of planted-to-harvested acres to determine its harvested area of 82.8 million acres. Its objective yield of 49.8 bushels per acre was unchanged from the agency’s Ag Outlook Forum projection based on a weather-adjusted trend model which assumes normal weather. The production forecast of 4.125 billion bushels is just 5 million bushels above the average of published trade estimates and if realized, would be up 16% from 3.558 billion collected in 2019. USDA forecasts total 2020/21 supply of 4.720 billion bushels, up 5% from 4.482 billion in 2019/20.

USDA projects ending stocks for 2020/21 at 405 million bushels. Those were 47 million below the average trade forecast of 452 million, and down 175 million from the 2019/20 forecast. In its Ag Outlook Forum, analysts presented a carryout much lower at 320 million bushels. USDA’s initial 2020/21 two major use forecasts are as follows with comparisons to the 2019/20 forecasts: crush use of 2.130 billion bushels versus 2.125 billion, and exports of 2.050 billion versus 1.675 billion. USDA’s first forecast of the national average on-farm cash price is $8.20, and that compares to the agency’s latest old-crop forecast of $8.50.

Changes to USDA’s old-crop foreign soybean projections in the May report are highlighted by lowered South American output as the Brazilian crop was trimmed 0.5 million metric tons (MMT) to 124.0 MMT, and Argentina’s crop was lowered 1.0 MMT to 51.0 MMT. The estimate for Brazil came well above published trade expectations and compares with Brazilian agency CONAB’s latest forecast issued ahead of the report for a crop of 120.3 MMT. USDA’s estimate for Argentina came about as expected. The biggest change in USDA’s old-crop foreign demand figures was an increase to Brazil’s exports of 5.5 MMT to 84.0 MMT, given the torrid shipment pace that has been aided by accelerated weakness in the local currency, the real. Greater Brazilian shipments come as China’s imports were raised 3 MMT from April to 92.0 MMT and as China’s crush forecast was raised 0.5 MMT to 86.5 MMT. Confirmation of a smaller Brazilian crop may swing some better export potential from China back to U.S. origins this summer should Phase One targets remain.

In its initial global production forecasts for 2020/21, USDA forecasts them at 362.76 million tonnes, up 8% from 2019/20 output of 336.11 million tonnes. It is particularly interesting to review USDA’s first 2020/21 production forecasts for the major world soybean producers in comparison to the latest 2019/20 forecasts. USDA forecasts the U.S. output at 112.26 million compared to 96.79 MMT in 2019/20, Argentina 2020/21 at 53.50 MMT vs 51.00 MMT, Brazil at 131.00 MMT vs 124.00 MMT and China at 17.50 MMT vs 18.10 MMT. Rebounding output in the U.S. comes following the historic planting issues in 2019, while the expected expansion in Brazilian soybean plantings in 2020/21 comes as farmers took advantage of favorable prices this spring to market a record share of expected new-crop output. Combined, these forecasts are projected to account for approximately two-thirds of global soybean output in 2020/21 while accounting for more than three-quarters of projected soybean production growth.

With respect to the most important metrics for the world soybean demand, we find USDA forecasting total 2020/21 demand of 360.67 MMT, and that is up from 347.70 MMT in 2019/20. Demand from major importing nations is seen rising to 148.34 MMT in 2020/21 versus latest forecasts for 2019/20 of 140.51 MMT. China’s crush is expected to grow by 6.5 MMT to reach 93.00 MMT, as the nation’s pig population continues its rebound from the African Swine Fever epidemic. China is forecast to account for more than half of the projected increase in soybean demand while accounting for 85% of expected import growth.