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US soybean production forecast up 18% on year in 2020-21: USDA

  Feb 24,2020 S&P Global Platts
US soybean production in the 2020-21 marketing year (September-August) is forecast at 4,195 million bushels, up 18% year on year due to expected favorable weather condition, the US Department of Agriculture said Friday in its 2020 outlook report.

The soy yield forecast of 49.8 bu/acre in 2020-21, up 5% on the year, is based on a weather-adjusted trend assuming normal growing season weather, the USDA said.
US soybean production and yield estimates were cut drastically in 2019-20 due to heavy flooding during spring season, which delayed the soybean planting in the Midwest region by two weeks. Consequently, soybean yield and production estimates were cut as the late maturing crop was battered by cold weather and unseasonal rains during the harvesting period in the last quarter of 2019.

According to the sources, because of harsh weather and storms in January, plus heavy snow and mud on the ground, US soybean farmers could again face soggy fields and planting delays in late April, which may reduce overall crop productivity.

However, some analysts feel it is too early to predict soybean planting delays in 2020-21.

With the exception of North and South Dakota, which are in the Northern Plains, the growing areas are pretty dry in the Midwest, said an East Coast based agricultural commodities analyst. So, the probability of soybean planting delays in 2020 is still uncertain.

EXPORTS PROJECTED UP 225 MILLION BUSHELS
Soybean exports for 2020-21 are projected at 2,050 million bushels, up 225 million from the 2019-20 forecast, the USDA said. Soybean ending stocks for 2020-21 are projected at 320 million bushels, down 105 million from 2019-20 and the lowest since 2016-17, it added.

Increasing global import demand, particularly for China, and a recovery in US market share, will support higher US soybean exports following a sharp decline over the past two years, the outlook report said.

According to the sources, USDA is bullish on higher soybean exports in 2020-21 marketing year because in January the US signed trade an initial trade deal with China and passed a major milestone in concluding a trade deal with Mexico and Canada.

Beijing and Washington signed a Phase 1 trade deal on January 15 under which China committed to purchasing $36.3 billion worth of US agricultural products in 2020 and $43.3 billion in 2021.

Since soybeans account for over 50% of the annual US agricultural exports to China, soybean purchases are a vital cog in the Phase 1 deal, according to the USDA.

However, the USDA's soybean export outlook for 2020-21 has not factored in the coronavirus outbreak in China, which has claimed over 2,200 lives and brought the whole business supply chain in the country to a virtual halt.

The USDA did mention the imminent threat of coronavirus on US soybean exports and Phase 1 trade deal on Thursday.

"The current outlook for exports to China is tempered by significant uncertainties surrounding the Covid-19 [coronavirus disease] outbreak, which may affect the timing of China's purchases under the Phase 1 agreement during the calendar year 2020," the USDA said on Thursday in its 2020 agricultural outlook report.

SOYBEAN CRUSH EXPECTED TO SEE RECORD HIGHS
US soybean crush in 2020-21 is projected at a record 2,130 million bushels, up 1% on the year, driven by higher domestic use of soybean meal that more than offsets slightly lower meal exports, the USDA said.

Soybean meal usage in the US – a major meat producer and exporter – has risen sharply due to increased demand for meat products in China – the world's largest pork consumer – which culled millions of pigs due to the outbreak of African swine fever, a fatal disease for the swine population.

As the epidemic lingers, which started in August 2018, China has started to import more pork from the US, due to its domestic shortage.

Soybean meal is used extensively as high-protein animal and bird feed across the global meat industry.
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