Oleochem Analytics – USDA lowered its soybean export forecast for Argentina and Brazil for the 2020/21 marketing year by 2.65m and 3m tons, respectively, according to the July Oil Crops Outlook report published every month by the U.S. Department of Agriculture (USDA).
The expected decrease of exports comes after drought conditions in Argentina along the main river waterway limiting the ability of exports from the Port of Rosario, where 93% of Argentina’s vegetable oils exports were exported from in 2019.
Additionally, weaker demand from China has decreased the need for soybean imports from Brazil. As such, 2020/21 exports from Argentina and Brazil to China are forecast at 3.7m and 83m tons.
China is expected to draw down its soybean stocks to account for less imports from Brazil, while ending stocks in both Argentina and Brazil are expected to increase in both 2020/21 and 2021/22 from last month’s Oil Crops Outlook forecast.
USDA forecasted domestic soybean crush to decline slightly. However, higher extraction rates led USDA to leave its soybean oil production forecast relatively unchanged for 2020/21 at 25.4 billion pounds.
According to the USDA report, high prices for U.S. soybean oil have severely limited exports in recent months. As such, the 2020/21 export forecast for soybean oil has been reduced by 125 million pounds to 1.775 billion pounds.
With monthly soybean oil export volumes cooling, the rise in soybean oil production is expected to be captured by the domestic market. More specifically, soybean oil used for biodiesel will decline by 200 million pounds with a 300-million-pound increase to soybean oil used for food and residual use to 14.6 billion pounds.