(Washington, D.C.) -- The United States Department of Agriculture is counting heavily on soybean exports in the coming year.
The agency projects total exports to top 2.3 billion bushels. That's way higher than the 1.65 it says will be sent out of the country this marketing year. It's a big number says University of Illinois Extension Agricultural Economist Todd Hubbs and it will require a hefty recovery in the global economy.
“To me it feels like for both corn and soybeans USDA is pointing to a robust economic recovery both domestically and around the world. And while we have seen some of the world start to recover, we are still going through some stuff here in the United States and in other places. Mexico is still having issues. Brazil is still having issues. There has been resurgence of (COVID-19) outbreaks around the world. This thing is far from over and when I look at the numbers, it is some pretty strong consumption numbers for both corn and soybeans.”
Maybe, too, strong thinks Hubbs. Naturally, some of what USDA is building into the export forecast is based on the Phase One trade agreement with China. That trade is in dollars, not product, so it could come in soybeans, but is likely to include corn and pork, too. Still, things aren't on pace says Hubbs.
“You know in China they have had flooding and their economy is dependent upon exports. If the world is having issues, their economy is going to have issues as well. We have seen them begin to rebuild their hog herd, but they are not back to where they were. This impacts soybean exports. I expect there to be stronger pork exports to China for the rest of this year but how much soybeans are they going to take. Particularly, when South America is looking to up exports by about 4.7% next year. I want those numbers to be right if not even higher but we all need to have some clear eyes about where we are in this economic recovery, the kind of uncertainty with China in particular, and what they may mean for exports when we are thinking about marketing soybeans.”
On that note, USDA last month raised the season's average cash price for new crop soybeans by 30 cents a bushel to $8.50. Hubbs says it is not a bad price forecast given the agency's consumption projection. If those exports, to China, aren't met he says that price will come down.