U.S. Oilseed Situation and
Outlook 2000-01
Nick Piggott
North Carolina State University
Southern Regional Outlook
Conference
corn
soybean
Year
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
wheat
1990
Stock/Use Ratios (%)
60.0
55.0
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Rising Stock to Use Ratios for U.S. Crops,
1990-2000
U.S. Farm Sector Income
Billions of Dollars
60
50
40
Net Farm Income
Govt. Payments
LDP's
30
20
10
0
1996
1997
1998
Year
1999
2000F
Loan Deficiency Payments for 1999
$2,500
Millions of Dollars
$2,107
$1,993
$2,000
$1,500
$1,000
$890
$687
$534
$500
$0
SOYBEANS
CORN
WHEAT
Commodity
COTTON
OTHER
corn
wheat
soybean
Linear (corn)
Linear (soybean)
Linear (wheat)
Acres Planted in the U.S, 1996-2000
Millions of Acres
90
80
79.2
79.5
75.1
70.0
80.2
72.0
79.6 y = -0.1364x + 79.602
77.4
73.8
70
y = 2.4385x + 63.586
74.5
65.8
70.4
y = -3.2008x + 77.013
64.2
62.8
60
62.9
50
1996
1997
1998
Year
1999
2000
Southern Region Soybean Production
State
Area Harvested
1999
2000
Yield
Production
% 1999 2000 %
(000's acres)
(Bushels/Acre)
1999
2000 %
(000's bushels)
Southern Region
AR
NC
KY
MS
TN
LA
VA
TX
SC
OK
GA
AL
3,350
1,300
1,150
1,900
1,190
990
440
380
450
360
190
200
3,400 1.5
1,330 2.3
1,080 -6.1
1,650 -13.2
1,160 -2.5
900 -9.1
460 4.5
360 -5.3
450 0.0
430 19.4
180 -5.3
170 -15.0
Total (Sth Reg) 11,900
11,570
-2.8
Total U.S.
72,476
73,474
1.4
(Sth Reg/U.S) % 16.4
15.7
28
23
21
23.5
18
27
27
27
20
19
19
16
26
30
36
23
26
23
34
33
23
24
21
19
-7.1
30.4
71.4
-2.1
44.4
-14.8
25.9
22.2
15.0
26.3
10.5
18.8
93,800
29,900
24,150
44,650
21,420
26,730
11,880
10,260
9,000
6,840
3,610
3,200
22.4 26.5 18.4
285,440
88,400 -5.8
39,900 33.4
38,880 61.0
37,950 -15.0
30,160 40.8
20,700 -22.6
15,640 31.6
11,880 15.8
10,350 15.0
10,320 50.9
3,780 4.7
3,230 0.9
311,190
9.0
36.5 39.5
8.2 2,642,908 2,899,571
9.7
61.3 67.1
10.8
10.7
Current Soybean Crop Conditions
State
VP
P
F
G
WI
NC
KY
IL
IN
MI
MN
SD
OH
IA
ND
MO
MS
TN
AR
NE
KS
LA
1
1
0
2
2
1
2
2
4
4
6
5
16
11
20
27
27
34
3
2
3
5
6
5
6
11
10
11
14
16
22
22
22
23
34
30
14
19
28
25
28
32
33
28
28
28
25
27
32
38
30
31
26
27
54
67
43
55
52
54
47
42
44
46
47
39
24
25
24
16
12
9
28
11
26
13
12
8
12
17
14
11
8
13
6
4
4
3
1
0
7
12
28
42
11
18 states
Total
Prev Wk
Prev Yr
8
9
12
15
28
32
40
36
EX (G+EX) Prod. Share Rank
12
8
Source: USDA, Crop Progress, September 18, 2000
82
78
69
68
64
62
59
59
58
57
55
52
30
29
28
19
13
9
63,360
39,900
38,880
481,750
260,360
89,790
298,200
148,750
188,770
495,850
68,310
193,800
37,950
30,160
88,400
176,700
68,400
20,700
0.022
0.014
0.013
0.166
0.090
0.031
0.103
0.051
0.065
0.171
0.024
0.067
0.013
0.010
0.030
0.061
0.024
0.007
2,899,571
0.962
13
14
15
2
4
9
3
8
6
1
12
5
16
17
10
7
11
18
Projected Supply/Demand for U.S.
Soybeans 2000-01
Million Bushels
• Beginning Stocks: 265
• Production: 2,900 (73.5 million acres @ 39.5 bu/acre)
• Total Supply: 3,167
• Crush: 1,630
• Exports: 1,000
• Total Use: 2,802
• Ending Stocks: 365
• U.S. Season Average Price: $4.35-$5.15
Soybean Supply and Disappearance 1968-2000
3,500
2,500
production
crush
exports
ending stocks
2,000
1,500
1,000
500
Year
1998
1995
1992
1989
1986
1983
1980
1977
1974
1971
0
1968
Millions of Bushels
3,000
Record Soybean Use in 2000-01
• Record Crush of 1.63 billion bushels
– 2.5 %  in meal use from 99/00
 2 %  domestically from 99/00
 4 %  exports from 99/00
– 5%  in oil use from 99/00
* 3 %  domestically from 99/00
* 31 %  exports from 99/00
• Record exports of 1 billion bushels
–  in Brazil and Argentina exports helpful
– improved export prospects to China
World Soybean Trade
Major Soybean Importers
Year
Year
00/01
99/00
98/99
97/98
96/97
00/01
99/00
98/99
97/98
96/97
95/96
94/95
93/94
Brazil
95/96
Argentina
EU
Japan
China
94/95
US
1200
1000
800
600
400
200
0
93/94
Million Bushels
1200
1000
800
600
400
200
0
Million Bushels
Major Soybean Exporters
U.S. Soybean Exports by Destination
10,000
9,000
EU
Metric Tons
8,000
7,000
JAPAN
6,000
STH KOREA
5,000
CHINA
4,000
MEXICO
3,000
INDONESIA
2,000
1,000
0
1995
1996
1997
Year
1998
1999
World Soybean Supply, Trade, and
Ending Stocks
98/99
%
World
99/00
% 00/01 %
World
World
%
99/00-00/01
(Million Metric Tons)
Production
World
U.S.
Brazil
Argentina
Other
159.84
74.60
31.30
20.00
33.94
47
20
13
21
156.33
71.93
31.40
20.70
32.30
46
20
13
20
166.57
78.91
32.80
21.50
33.36
47
21
13
21
7
10
4
4
3
Exporters
World
38.63
United States 21.90
Argentina
3.23
Brazil
8.90
Other
4.60
57
8
23
12
46.47
26.67
5.10
10.20
4.50
57
11
22
10
45.34
27.22
4.20
9.40
4.52
60
9
21
10
-2
2
-18
-8
0
Importers
World
EU-15
Japan
China
Other
40.24
16.77
4.81
3.85
14.81
42
12
10
37
46.79
16.79
4.80
9.00
16.20
36
10
19
35
45.43
16.44
4.70
7.25
17.04
36
10
16
38
-3
-2
-2
-19
5
Ending Stocks
World
U.S
Brazil
Argentina
Other
27.15
9.48
6.30
6.22
5.15
35
23
23
19
23.41
7.20
4.90
4.65
6.66
31
21
20
28
25.29
9.93
5.00
4.70
5.66
39
20
19
22
8
38
2
1
-15
Source: USDA, WASDE-366-23, September 12, 2000
Price Prospects for U.S. Soybeans
• USDA projecting price in $4.35/bu to $5.15/bu range
– improvement from the earlier $3.90/bu-$4.80/bu estimates
• S-Nov 2000 contract low of $4.501/2/bu
– rallied to around $5.00 level after August weather
• Burdensome ending stocks dampen rally
• The carry between S-Nov 00 and S-Mar 01 is about
$0.20/bu currently
Marketing Strategies
• With cash prices below the loan rate program details
become important for loans, LDP’s, and certificates
• On-farm or off-farm storage availability?
– What does it costs to store soybeans?
• On-farm: 4-5 cents/month
• Off-farm: 7-8 cents/month for a 5 month period
• Rough calculations of returns to soybean storage
– currently about “38 cents - storage costs” for storage until
March (using Elizabeth City, NC example)
– on-farm storage returns 13 cents
– off-farm storage is about break-even
On-Farm Storage Strategies
• Storage Hedge
– conservative: store grain, price using forward or
hedge, and take the LDP at same time
– moderate: store grain, hedge using a put option, and
take the LDP at same time
– aggressive: store grain, leave grain unpriced, and
take the LDP at same time
• Merits of storage are stunted when prices are below
loan rate
– must try to capture large LDP or use 60 day lock-in to get some
upside potential
No On-Farm Storage
• Less flexibility to do better than the loan rate
• Commercial storage only if:
– forward price  charges and interest
or
– local basis is extremely weak at harvest
• use a HTA contract
• Sell soybeans at harvest, take the LDP, and buy a call
option
– currently an at-the-money S-Mar 01 call costs $0.27/bu
Looking Ahead to 2001/02
• If bumper crop prevails in 2000-01 and ending stocks
are 365 mill. bu. this will dampen prospects for 2001/02
– similar acreage and trend yields and declining exports in world
market means production > demand in 2001-02
• Brazil and Argentina production important for U.S.
exports
• Planting price opportunities and weather premiums
• U.S. prospects hinge on
– new markets for U.S. soybeans, and meal and oil
– large increase in demand to offset supply