The 2012 U.S. soybean crop was 79 million bushels smaller than the 2011 crop.

Because of smaller beginning stocks, the 2012-13 marketing year supply was 121 million bushels (3.6 percent smaller) than the previous year’s supply.

Consumption of U.S. soybeans during the first quarter of the marketing year, however, was record large and the pace of consumption remained high during much of the second quarter.

The rapid pace of consumption reflected continued strong export demand for soybeans and soybean products and the drought-reduced South American harvest in 2012.

“The market was willing to let consumption proceed at such a rapid pace in anticipation of a seasonal slowdown in export demand during the last half of the marketing year when South American supplies become more abundant,” said University of Illinois agricultural economist Darrel Good.

“With prospects of a sharp rebound in South American production to a record level in 2013, it has been anticipated that the slowdown in consumption of U.S. soybeans would be sharper than normal this year and that year-ending stocks would be maintained at pipeline levels.

“The USDA’s estimate of March 1 stocks of U.S. soybeans to be released on March 28 will reveal how large the seasonal slowdown in consumption needs to be. The magnitude of the required slowdown will in turn determine whether prices need to adjust higher in order to slow the pace of consumption more than normal or whether supplies are large enough to allow prices to continue to move lower,” Good said.

Good explained that projecting the likely level of March 1, 2013, stocks is a bit complicated, but starts with the estimate of Dec.1, 2012, stocks of 1.9656 billion bushels. A small quantity of imports during the quarter is added to that estimate and the estimate of consumption during the quarter is subtracted to project the magnitude of March 1 stocks. Imports may have been near 5 million bushels.

According to Good, consumption occurs in three categories: exports, domestic crush, and domestic feed, seed, and residual use.

USDA’s weekly export inspections report showed exports during the quarter totaled 539.3 million bushels. However, total Census Bureau export estimates for December and January were 13.7 million bushels less than export inspections reported for the two months.

If that margin persisted through February, exports during the quarter would have been near 525.6 million bushels.