“To reach 1.33 billion bushels, exports during the final five weeks of the marketing year need to average only 4.6 million bushels per week, only about 1.4 million above the most recent five-week average. It appears exports will be very close to the projected level,” he said.

Year-ending stocks of 125 million bushels represent 4 percent of projected marketing year consumption.

“In recent history, the smallest year-ending stocks were 112 million bushels in 2003-04. However, those stocks represented 4.5 percent of marketing year consumption. It appears unlikely that year-ending stocks this year could be much less than 125 million bushels,” he said. 

It is possible that old-crop soybean supplies are more abundant than is implied by the June 1 stocks estimate, requiring a smaller reduction in the domestic crush in July and August.

“There is no reason to suspect supplies are larger than estimated other than the recent sharp decline in prices. Still, Sept. 1 stocks estimates have been surprisingly large in some years, resulting in an upward revision in the estimated size of the previous year’s harvest.

“The most recent examples were in 2007 and 2012 when the estimate of the previous year’s crop was increased by 90.6 million bushels and 37.5 million bushels, respectively,” he said.

Assuming the 2013 U.S. soybean crop is near its potential of 3.4 billion bushels, rationing should not be an issue in the 2013-14 marketing year.

“The strength of demand for U.S. soybeans then will determine price and magnitude of consumption.”

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According to Good, two factors support prospects for strong soybean demand in the year ahead. First is the expectation that China will continue to import large quantities of soybeans so that U.S. exports will increase even with large crops in South America.

These expectations are supported by current export sales data showing that China has already purchased nearly 400 million bushels of U.S. soybeans for import during the 2013-14 marketing year. Sales to China are about 25 million bushels larger than at this time last year.

“The second potentially friendly demand factor for soybeans is increasing biodiesel production. 

“The amount of soybean oil used for biodiesel production in the year ahead and beyond depends on a large number of factors, including U.S. biofuels policy; the pace of expansion in the domestic ethanol blend wall; and competition from other biodiesel feedstocks, particularly imported palm oil,” he said.

The USDA currently projects that soybean oil used for biodiesel will reach 5.5 billion pounds in 2013-14, up from 4.8 billion pounds this year and 4.87 billion pounds last year. The projection represents nearly 28 percent of total projected domestic use and exports of U.S soybean oil.

“Unlike the U.S. corn market, where demand and consumption appear to be reaching a plateau, demand prospects for soybeans appear to be strong. If that is the case, a period of higher soybean prices relative to corn prices would be expected,” Good noted.