USDA Outlook: U.S. soybean prices average US$11.50/bushel in November, down from US$11.70/bushel in October as lower demand outlook pushes prices to lowest level in a year; crop-year average farm price for soybeans forecast at US$10.70-US$12.70/bushel

WASHINGTON , December 13, 2011 (press release) – The following article is excerpted from the December Oil Crops Outlook published by the Economic Research Service of the USDA.

Drop in U.S. Export Sales of Soybeans Portends Higher Ending Stocks, Lower Prices

U.S. export sales and shipments of soybeans for 2011/12 have been disappointing. According to USDA’s Export Sales report, soybean shipments through December 1 were down by one-third from a year earlier. There is little optimism for an improvement in the pace of upcoming shipments as the year-to-year decline for the outstanding sales is about the same. USDA considered that evidence in lowering its 2011/12 forecast of U.S. soybean exports by 25 million bushels this month to 1.3 billion. If realized, this would be only the second year ever that U.S. soybean exports are surpassed by shipments from Brazil. Although China accounts for a large part of the lost sales, it is not the only import market where U.S. sales have slipped. Sales commitments to the European Union (not long ago the top market for U.S. soybean exports) have collapsed by 75 percent this season.

In addition, the forecast of the domestic soybean crush is lowered this month by 10 million bushels—to an 8-year low of 1.625 billion. The estimated crush for September-October 2011 may have already fallen off by 25 million bushels against the 2010/11 pace (which totaled 1.648 billion bushels for the complete marketing year). Higher estimates of the extraction rates for soybean meal and soybean oil are seen satisfying current demand for both products at a lower rate of soybean crushing.

The expected reduction in soybean demand for 2011/12 would now exceed the decline in the supply. Consequently, season-ending stocks are seen edging up to a 5-year high of 230 million bushels from 215 million last year.

A dimmer demand outlook has pressured the price of soybeans to its lowest level in a year. In November, U.S. farmers received an average soybean price of $11.50 per bushel, down from $11.70 per bushel in October and $12.20 in September. Price direction for the next several months may hinge on how well the new crop in South America develops. The crop-year average farm price is forecast by USDA at $10.70-$12.70 per bushel, compared to last month’s forecast at $11.60-$13.60 per bushel.

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