“It now appears that the crush may exceed that projection for several reasons. First, crush was relatively small in the fourth quarter of the 2010-11 marketing year. Second, the pace of domestic soybean meal consumption has been expanding. Third, the small South American crop may support U.S. soybean meal exports above the current projection. The crush may be about 10 million bushels larger than the current projection of 1.66 billion bushels,” Good said.   

At the beginning of the marketing year, the USDA projected U.S. exports at 1.415 billion bushels, said Good. The projection was reduced as the year progressed and was at 1.275 billion bushels by January 2012.

“The forecast, however, increased beginning in April and now stands at 1.335 billion bushels,” he said. “Total export sales already exceed that projection, which is common, and exports will need to average about 13 million bushels per week during the last 10 weeks of the year to reach the projection.

“The current pace of exports is a little slower than the needed pace, but exports are still likely to reach the projected level. While the pace of exports has slowed in a typical seasonal pattern, sales for export during the 2012-13 marketing year are record large, underscoring the strength in Chinese demand.

“The USDA will update the projections of consumption and ending stocks for both marketing years on July 11. The estimate of June 1 stocks, to be released on June 29, will provide some confirmation about the pace of consumption and likely year-ending stocks,” Good said.  

With prospects for relatively small year-ending soybean stocks, the focus is quickly turning to the prospective size of the 2012 U.S. crop. An estimate of planted and harvested acreage will be available with the USDA’s June 29 Acreage report.

“With the soybean price rally that occurred this spring, it would not be surprising if acreage exceeded intentions reported in March,” Good said. “While acreage estimates will influence production prospects, the major focus will be on yield prospects.”

In the June WASDE report, the USDA projected a U.S. average yield of 43.9 bushels and 2012-13 marketing year-ending stocks at what is generally considered to be a minimum level of 140 million bushels. Good said that the trend yield for 2012 is 43.4 bushels, 1.9 bushels above the 2011 average yield.

“Continuation of stressful weather in the central and eastern growing areas, along with declining crop condition ratings suggest that the 2012 yield could be below trend again in 2012,” Good said.

“A shortfall in production would require that consumption during the year ahead be reduced from the current USDA projection of 3.255 billion bushels. The recent price rally is in recognition of the rationing that may be required.

“Unless weather and crop conditions improve soon, which does not appear likely, additional price strength is expected,” Good said. “Talk of the 2008 futures price peak near $16.60 has surfaced.  While prices at that level are not yet justified, they are within the range that we have projected for the ‘new era’ of prices that began in 2007.”