U.S. soy glut could take three years to eliminate

WASHINGTON, D.C. — It could take three years or longer for the United States to get rid of its glut of soybeans.

Robert Johansson, the U.S. Department of Agriculture’s chief economist, delivered the bearish message today at the USDA Agriculture Outlook.

As of early 2019, the stocks-to-use ratio of U.S. soybeans was around 23 percent, much higher than a more normal level of 10 percent

“To get back to 10 percent stocks-to-use, we would expect to take a number of years,” Johansson said, speaking to about 1,500 people at the USDA event.

American stocks of soybeans spiked in the last year because of the country’s trade dispute with China. Last year, President Donald Trump imposed tariffs on hundreds of Chinese products. China responded by slapping tariffs on U.S. goods, including soybeans.

China is the world’s largest importer of soybeans. In recent years it has bought more than $10 billion in U.S. soybeans, annually.

The trade disruption and boom in U.S. soybean stocks is not new information, as it’s been widely reported during the last nine months.

But Johansson’s data suggested the glut of soybeans could weigh on the market for several years.

The USDA is forecasting that the stocks-to-use ratio for soybeans won’t return to 10 percent until the 2022-23 crop year, meaning U.S. soybean prices could be depressed for a long time.

“Prices are going to recover…. But right now we forecast prices to take at least three years to get back to the levels we saw last year,” Johansson said.

The bearish data for soybeans could be negative news for canola growers in Canada, as soybean futures and canola futures typically move in unison.

The stockpile of beans in the U.S. will encourage more corn acres in 2019.

The USDA is projecting corn acres to hit 92 million in 2019, up about three million from 2018.

Soybean acres are expected to sink to 85 million, down 4.7 percent from 2018.

The decline in acres should give soybean prices a small bump.

“Soybean prices are expected to rise, modestly, despite the tariffs, up 20 cents to US$8.80 a bushel,” Johansson said.

The USDA will provide a more detailed outlook for grains and oilseeds tomorrow.

Contact robert.arnason@producer.com

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