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Soybean Fundamental Deep Dive

After examining the U.S. corn demand outlook for 2024/25 on this page, in the Dec. 6 issue, we want to take a look at the soybean demand outlook. It’s not as bright as the demand outlook for corn, because U.S. exports face extremely stiff competition from a likely record large Brazilian crop. U.S. export sales may soon drop off sharply with Brazilian beans priced well below U.S. beans for shipment from February forward.

To some extent, sluggish export demand for U.S. soybeans has been countered by expanding demand from U.S. oilseed processors driven by increased use of soyoil for renewable diesel. However, the boom in renewable diesel production has not been as strong as some had forecast and the future for renewable diesel and sustainable aviation fuel (SAF) continues to be clouded by uncertainty over Trump Administration biofuels policies.

U.S. soybean export activity so far in 2024/25 has not been great, but low prices have brought out enough demand to suggest exports might exceed USDA’s expectations despite Brazilian competition. U.S. export shipments for 2024/25 to date through Dec. 12 were 22.1% above a year earlier, while soybean export sales were up 9.7%. Export shipments are clearly ahead of the seasonal pace needed to reach USDA’s 2024/25 export forecast of 1.825 billion bushels. Shipments as of Dec. 12 equaled 51% of USDA’s forecast, while on average over the prior five years, they equaled just 47% of final exports. Export sales were also slightly ahead of the needed seasonal pace.

The concern is that U.S. soybean export sales might drop off more sharply than normal during the second half of 2024/25, not only because of increased trade tensions with China, but because the U.S. dollar has surged to a record high against the Brazilian real, intensifying the disadvantage U.S. beans face in the export market. The real/dollar exchange rate on Thursday morning surged to 6.24, up 28.6% from a rate of 4.85 at the start of 2024.

USDA forecasts the U.S. soybean crush for 2024/25 at 2.410 billion bushels, up 5.3% from last year. The U.S. crush for September-October was record large, 6.9% above a year earlier, with the October crush a record high for any month. The National Oilseed Processors Association (NOPA) crush for November was not quite as large as expected but was still a record for the month. Based on that, we estimate the full U.S. crush for November at a record high 203.2 million bushels and the September-November crush at 605.5 million bushels, right on pace to reach USDA’s marketing year forecast. U.S. soyoil stocks remain tight amid strong demand, encouraging crushing for soyoil. Implied soyoil disappearance ran well above the five-year range during the first three months of 2024/25. Uncertainty about Trump Administration biofuels policy still clouds the demand outlook, though.

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