U.S. Soy Analysis

Recent Soybean Demand and Weather Shifts Indicate USDA’s Soy Yield and Export Predictions Could Evolve

The U.S. Department of Agriculture’s August WASDE report lowered the forecast for U.S. soybean yields and exports. Jim Sutter, USSEC CEO, and Todd Goll, market research analyst, The Matthews Group at Marex, discuss the perceptions that shaped this report and how reality will balance them in the next couple months.

In its August 11 World Agricultural Supply & Demand Estimates report, U.S. Department of Agriculture analysts forecast U.S. soybean production at 114.5 million metric tons, a reduction from the previous report. It also reduced its U.S. Soy export forecast by 0.68 million metric tons.

“This report is interesting, because it shows how we are figuring out how to balance the current perception of the soybean crop in the field with reality,” says Todd Goll, market research analyst for The Matthews Group at Marex. “Regardless of how conditions are changing, the current reality is that these are the numbers we will trade for the next 30 days.”

The USDA team conducted most of that work in late July, before U.S. weather patterns shifted, bringing more rain to many of the soybean-growing regions that previously experience very dry weather. He notes that the yield estimates were based on surveys that did not include getting into fields to count pods. With promising weather forecasts for much of the U.S. Midwest through August, a critical time for soybean growth, combined with the actual field measurements that will be done for the September report, Goll believes that soybean yield estimates could increase.

In his conversation with Jim Sutter, chief executive officer of USSEC, following the release of the WASDE August 2023 Report, Goll explained the changing factors that he believes could lead to increases in both U.S. soybean yield and export forecasts in the next USDA WASDE report.

Sutter agrees with his observations about the shifting weather patterns.

“The size of the U.S. Soy crop will be determined in the next 30 days,” he says. “This year we’ve seen U.S. Soy growing areas that are traditionally drier receive abundant rainfall and conversely, those areas that are typically wet and humid have been very dry. In the last few weeks, we’ve started to see a recalibration and hopefully it is enough to help preserve the high yield potential of U.S. Soy.”

Sutter believes that once again this season, U.S. Soy will demonstrate the benefits of the U.S.’ tremendous geographic and agroclimatic diversity. He says that U.S. Soy farmers’ yield expectations have changed significantly in the past couple weeks, and that will likely continue throughout August, based on local weather conditions.

While Goll understood the decrease in soybean export projection from June to July, he found the additional reduction in this forecast in August surprising. He sees a developing global demand story for soybeans.

“In the past few weeks, China showed up, with both private crushers and the China State reserve buying soybeans from Brazil, the U.S. and Argentina,” Goll notes. “Crush margins in China are good.”

He explains how recovery of the Argentinian crush industry from their recent drought and German soy imports to produce biofuels will likely impact demand. He also expects U.S. crush to trend higher in the coming months.

In the meantime, Goll recommends that traders and decision makers throughout the soy supply chain keep an eye on how prices move based on this report. That, along with monitoring central bank policy decisions around the world, could help them identify opportunities for their business.

Goll also shares his positive outlook on the global economy.

“Despite coverage of recessions...the world economy is expected to grow $5 trillion in 2023,” he says. “I expect that to spur growth in 2024.”

Sutter expects U.S. Soy will support that growth. For example, he believes the international marketing by U.S. Soy farmers reflects the need and value of in-person connections that advance relationships and collaboration. That fuels the creativity and innovation that supports market growth.

“As we look to be one of the trusted solution providers to your business, we will continue to seek new partnerships and collaborate across the food and agriculture value chain,” he says. “Working together brings us a step closer toward achieving sustainability goals: Feeding our global village and reducing hunger in an environmentally sustainable way, while improving livelihoods and supporting economic growth across countries.”

Watch the full webinar for the complete breakdown and all the details. The webinar is available to watch or listen in: Bahasa, English, Chinese, French, Japanese, Korean, Spanish, and Vietnamese. 

This story was partially funded by U.S. Soy farmers, their checkoff and the soy value chain. 

We look forward to continuing the conversation on USSEC Linkedin.