Already known as the world's largest buyer of U.S. soybeans, China's true appetite for soybeans is likely to be tested as soybean production is anticipated to increase worldwide in 2014 and 2015. Chip Flory, editor of Pro Farmer, offered insights into soybean production and use on October 15 during the Grain & Meat Outlook Webinar, hosted by WATTAgNet and Farm Journal.
Flory's projections for soybean production for the 2013-14 marketing year called for U.S. soybean production to be at 77 million acres, a slight decrease from the 2012-13 season where 77.2 million acres were planted. However, with projected yields increasing by a bushel per acre in 2013-14, that difference is offset. Likewise, production in Brazil and Argentina is also projected higher, with Brazilian soybean production jumping from 82 million metric tons to 88 million metric tons, and Argentinian soybean production leaping from 49.5 million metric tons to 55 million metric tons.
U.S. soybean production is expected to see a significant increase for the 2014-15 marketing year, with 81.2 million acres planted and yields projected higher at 44 bushels per acre.
If those projections are realized, prices will continue to substantially drop. The average price per bushel for the 2012-13 year was $14.40 per acre, but estimated at $12.75 per acre for the 2013-14 year. Further price decline is anticipated for 2014-15, as Flory estimates the soybean price to be around $9 per acre.
"That's going to be awfully tempting to China to really get aggressive with their bean buying under a pricing scenario like that," said Flory. "With a good 2014 bean crop, China's appetite for soybeans will be tested."
Tom Elam, president of FarmEcon LLC, also participated in the webinar.