We are starting to see a few alternatives to the current supply and demand outlook for U.S. soybeans. The USDA is currently predicting old crop ending stocks on soybeans of 135 million bu (mbu). A few models are indicating this number may be slightly high, however. There are thoughts that we could see 15 mbu of old crop soybean sales either canceled or rolled to new crop such as has taken place in corn. This is more likely given the sizable spread between the United States and Brazil on nearby soybean values.

The USDA may also be underestimating U.S. soybean imports by 15 mbu. While a 30 mbu increase in soybean ending stocks does not seem newsworthy, it is enough to temper concerns on depleting old crop reserves.

Over the past several weeks we have had several acreage estimates released on this year’s crop. This has been a heavily debated topic ever since the prospective numbers were released in March. The most uncertainty is on corn where some analysts believe acres may increase as much as 5 or 6 million acres from the March figure.

There are others who believe any increase will be much smaller, and only total 500,000 acres. Soybean planting increases are more consistent and hold close to 1 million acres. Historically, planted acres do not increase more than 3 to 3 ½ million total from March to June.

One benefit for the corn market has been the elevated demand we are seeing in new crop months. This is mainly from China, which has booked 8.2 million metric tons (mmt) so far. China has booked another 1.5 mmt of corn from Ukraine. The question is how much more corn China will buy. According to Chinese officials the country may have the majority of the new crop imports they intend to make from the United States already covered. This will depend upon China’s domestic corn production though, and how much Brazil is able to supply with a smaller Safrinha crop.

Trade is also keeping a close eye on Ukraine corn exports. Between October 2020 and January 2021 Ukraine exported 4 mmt of corn, a reported 250 percent increase from normal. This is mainly from Chinese buying. Ukraine exports for the year are expected to increase for all of 2021 as production in the country rebounds from drought losses. If China continues to source needs from Ukraine, it may open the door for alternative U.S. business.

One source of pressure on the global corn market has been the elevated use of wheat as a feed grain. The question now is how long this will last. The price spread between corn and wheat will be a major factor in this decision, as will wheat availability. While the world wheat crop is forecast to be large this year, stocks are not forecast to increase as they are on corn. Given the elevated need for milling quality wheat in the global market, we may see sellers less willing to part with inventory for feed use.

The larger supply of soybeans that is coming out of Brazil this year is likely distorting global trade projections, including those from the United States. Even though in its later stages, the latest Brazilian crop estimates are calling for 137 million metric tons (mmt) of production this harvest season. This is roughly 3-4 mmt more soybeans than trade was expecting out of Brazil and eases the need for buyers to secure higher priced coverage from the United States. This could greatly lower U.S. late summer forecasts, and potentially generate competition even after the U.S. harvest begins next fall.

We are also seeing harvest data out of Argentina as fieldwork progresses. Corn harvest in the country is now 30 percent complete and officials are holding to their 48 mmt crop projection. Soybean harvest is 85 percent finished and officials believe the crop will total 43 mmt.

The month of June is likely to go down as one of the driest in history for the United States. Right now, June is on track to be the 10th driest in the past 126 years. This does not necessarily mean yields have been reduced though, as history shows rainfall from this point forward can still generate above trend yields. In years similar to this corn yield has been above the June estimate 46 percent of the time and soybeans have been above 84 percent of the years when rains developed from July onward.

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