The US Department of Agriculture (USDA) has cut global soy meal and soy oil supplies on the back of reduced Argentine and Chinese crush, the agency showed in its monthly World Agricultural Supply and Demand Estimates (Wasde) report on Thursday, January 12.
This, coupled with unexpected cuts to US soybean production and ending stocks estimates, contributed to underpin a steep upswing in prices, with front-month soy oil futures up 0.31 cents per pound and the equivalent soy meal contract up $6.4 per short tonne in the first fifteen minutes after the release.
Soybean products found price support despite little change to US soy oil and meal supply and demand estimates.
The only change to US soy oil projections was a reduction in exports from 1.2 billion pounds (500,000 tonnes) to 800 million pounds (360,000 tonnes), which, despite offset by higher disappearance, contributed somewhat to cap soy oil price gains.
Soy oil output estimates were also cut in Argentina and China while lifted in Brazil, with global output projected down 0.4 million tonnes on the month at 61.5 million tonnes.
Export and production patterns
On the trade front, major month-on-month changes were reductions of 250,000 tonnes and 140,000 tonnes to Argentine and US exports, respectively, a 100,000 tonnes increase in Brazil’s shipments and a 200,000 tonne cut compared in India’s imports.
US soy meal estimates were unchanged from December figures, while the USDA’s average price forecast was lifted from $410 per short tonne to $425 per short tonne, backed by a tighter global supply and demand balance.
Global soy meal production was cut from 258.5 million tonnes to 256.9 million tonnes as reductions from Argentina and China were only partially offset by an expected uptick in Brazil’s crush volumes.
“Argentina’s crush is reduced on lower supplies while crush for China is reduced on a lower-than-expected pace during the first quarter of the marketing year,” the report said.
This contributed to underpin soy meal prices, which rose more or less in tandem with beans after the release, while soy oil prices increased slightly more modestly.
On the export market, Argentina is forecast to lose market share to Brazil, as its soy meal shipments were trimmed by 1 million tonnes to 26.5 million tonnes and Brazil’s exports were pegged at 20.7 million tonnes, 1.1 million tonnes above December’s projections.
