Global oilseeds production forecast increased, but soybeans rise due to lower US crop estimates

Analysts did not expect significant changes in the USDA's October oil balance for 2022/23 MR, so the sharp decline in the US soybean production forecast surprised the market. However, declines in soybean yields in the US and canola in Canada will be more than offset by increases in soybean production in Brazil and canola in the EU.

Compared to the September estimates, the October oil balance for the 2022/23 MR underwent the following changes:

• The forecast of world production of oilseeds was increased by 1.76 million tons to 646.59 million tons (604.51 million tons in 2021/22 MR), in particular soybeans - by 1.22 to 390.99 (355.69) million tons, rapeseed - by 0.67 to a record 83.81 (73.84) million tons and sunflower - by 0.06 to 52.02 (57.11) million tons.
• The global processing estimate was increased by 2.63 million tons to 534.66 (512.41) million tons, especially for Brazil, which will harvest a record soybean crop. In addition, China will increase soybean processing, and the EU will increase rapeseed processing.
• The forecast for global ending stocks was raised by 1.56 million tons to 120.56 (111.15) million tons, primarily due to an increase in soybean stocks, especially in Brazil.

Trade in oilseeds will grow thanks to stronger soybean exports from Brazil and Argentina, partially offset by lower soybean exports from the United States and Paraguay.

In accordance with the changes in forecasts for the production and processing of oil crops, estimates of world production and consumption of meal and vegetable oils have been adjusted.

The world soybean balance for FY 2022/23 compared to the September report has changed as follows:

• The global production forecast was increased by 1.22 million tons to 390.99 million tons (355.69 million tons in FY 2021/22), in particular for Brazil – by 3 to 152 (127) million tons, while local experts estimate it in 152-155 million tons as a result of increased sowing areas and favorable weather. For the US, the yield estimate was lowered by 1.78 to 117.38 (121.53) million tons, as the yield forecast was reduced by 0.7 bushels/acre to 49.8 bushels/acre.
• The estimate of world exports was increased by 1 million tons to 168.84 (154.18) million tons, in particular for Argentina - by 2.3 to 7 (2.8) million tons (thanks to a better exchange rate for exporters) and Brazil - by 0 .5 to 89.5 (79.55) million tons, which compensates for the decrease in estimates for the USA by 1.1 to 55.66 (58.72) million tons.
• The forecast of global soybean imports was increased by 1.2 million tons to 166.23 (154.4) million tons, primarily for China - by 1 to 98 (90) million tons.
• The estimate of world consumption was increased by 2.56 million tons to 380.24 (363.58) million tons, in particular for China - by 1 to 116.59 (106.72) million tons, Brazil - by 1.25 to 155.1 (154.25) million tons, but decreased for Argentina by 0.5 to 47.75 (46.96) million tons and the USA - by 0.24 to 64.15 (62.78) million tons.
• The forecast of ending reserves was increased by 1.6 million tons to 100.52 (92.38) million tons, separately for Brazil - by 2 to 31.3 (23.16) million tons.

November soybean futures in Chicago responded to the report by rising 0.7% to $515/t, which is 3.9% lower than last month.

The forecast for rapeseed production in the EU was raised by 1 million tons to 19.2 million tons due to increased yields in Germany, France and Poland, which partially offset the decrease in canola production in Canada by 0.5 million tons to 19.5 million tons due to low yields.