USDA sharply raises soybean crop forecast to boost oilseed supply in 2024/25, despite declining sunflower production

USDA's August supply and demand WASDE report raised the 2024/25 MY global oilseeds production forecast sharply by 4.45 million tonnes to 690.54 million tonnes (a 5% increase from 2023/24 MY) as global sunflower production declined by 2.27 million tons is compensated by an increase in soybean harvest by 6.88 million tons and rapeseed by 0.9 million tons.

Compared to the July estimates, the new soybean balance for the 2024/25 FY has undergone the following changes:

• The initial stock estimate was raised by 1.11 to 112.36 million t (100.66 million t in FY 2023/24) following a balance sheet adjustment for FY 2023/24, where the harvest forecast in Argentina was lowered by 0.5 to 49 million t. the estimate of exports from Brazil was increased by 2 to 105 (96) million tons, and imports to China - by 3.5 to 111.5 (104.5) million tons due to the increase in supplies from the USA and Brazil. However, analysts do not share this optimism, as stocks of soybeans and soybean meal in China are growing, and the processing margin remains negative.
• The global production forecast was increased by 6.88 to 428.73 million tons (395.12 million tons in 2023/24 MR and 378.4 million tons in 2022/23 MR), in particular for the USA - by 4.2 to 124.9 (113.34) million tons thanks to an increase in the area of sowing by 405 thousand hectares and productivity, although analysts' estimates are somewhat more pessimistic. For Ukraine, the harvest forecast was increased by 1.3 million tons to a record 6.8 (5.2) million tons due to an increase in the estimated area of sowing by 0.7 million hectares to a record 2.9 million hectares (2.6 million hectares according to official data Ukrstat), although the yield estimate was reduced from 2.5 to 2.35 t/ha due to the heat. The harvest forecast for the Russian Federation was also increased by 0.7 to 7.3 million tons and for India - by 0.6 to 12.8 million tons.
• The estimate of world consumption was increased by 1.3 to 402.84 (383.05) million tons, which will significantly exceed last year's indicator and production volume.
• The global export forecast was increased by 1 to 181.22 (177.3) million tons, in particular for the USA - by 0.7 to 50.4 (46.3) million tons, Ukraine - by 0.8 to 4.3 million tons , the Russian Federation - by 0.4 to 1.3 million tons, while for Argentina the estimate was reduced by 1 to 4.5 million tons.
• The estimate of global ending stocks was raised by 6.54 to 134.3 million t (112.36 million t, 99.7 million t and 100.3 million t) thanks to increases in stocks in the US, China and Argentina, which offset their decline in Brazil . At the same time, analysts estimated reserves at 127.97 million tons.

According to the report, November soybean futures on the Chicago Stock Exchange fell by 1.6% to $362.3/t (-8% compared to the data after the July report).

USDA experts increased the forecast of global rapeseed production in 2024/25 MR by 0.9 to 88.8 (88.75) million tons, in particular for the Russian Federation - by 0.8 to 5.1 million tons. At the same time, for Ukraine, the forecast was left at at the level of 4.2 million tons (although harvesting was completed and the harvest was 3.3 million tons), and for the EU - at the level of 18.9 (20) million tons, while European agencies lowered their estimates to 17.5-18.4 million tons

The global rapeseed export forecast was increased by 0.2 to 17.5 million tons, in particular for the Russian Federation - by 175 to 925 thousand tons. For Ukraine, the export forecast was left at the level of 3.3 million tons, and processing was estimated at 400 thousand tons, which causes analysts have doubts.

August rapeseed futures on the Paris MATIF exchange fell 1% to €460/t or $503/t (-3.2% for the month) amid falling soybean prices.

The forecast of world production of sunflower in 2024/25 was reduced by 2.275 to 52.54 (55.93) million tons, in particular for Ukraine – by 1 to 13.5 (15.5) million tons, the EU – by 0.75 to 10 ,15 (10) million tons, the Russian Federation - by 0.5 to 16 (17.1) million tons. The estimate of world consumption of sunflower was reduced by 2.1 to 52.8 million tons, and the final reserves - by 0.14 to 2 .45 million tons compared to 2.909 million tons in FY 2023/24.

A possible crop adjustment for EU and Ukraine rapeseed at the end of August and canola in Canada in September, as well as the October soybean sowing results in Brazil, will influence oilseed prices in the coming months.