Despite very tight stocks, robust prospects for use and exports, and an expected decline in U.S. plantings this year, soybean prices for 2003 are projected at $5.10 per bushel, “below what we would have expected based on historical data,” says Peter Riley, agricultural economist for USDA's Farm Services Agency.

“Global soybean disappearance is quite striking,” he said at the annual Agricultural Outlook Forum at Washington, D.C., “and even with the growth in South American soybean production, the United States keeps exporting more soybeans, and there is little indication of a slowing near term.” There have been substantial gains in soybean products, too, he says.

So what's the problem?

“The size of the pie keeps growing,” Riley says. Production in Argentina and Brazil keeps expanding, and “they passed us in 2002.” A larger world crop this year will increase the supply. “All this production hanging over the market has held the price lower than we would have expected.”

Analysts from USDA's World Agricultural Outlook Board, Economic Research Service, Foreign Agricultural Service, and Farm Service Agency are projecting U.S. planted acreage this year at 72.2 million, compared to 73.8 million last year. Harvested area is forecast at 70.9 million acres and yield at 39.7 bushels, up from the preliminary estimate of 37.8 last year, but below the 1994 record 41.4 bushels.

Supply is projected at only 1 percent above 2002-03, with higher production partially offset by lower beginning stocks, which are at a six-year low of 165 million bushels.

Domestic use will be basically static at 1.84 million bushels, and crush up 1 percent at 1.67 million bushels. Soybean meal use is expected to grow about 1 percent to 2 percent, limited by slow expansion in poultry/hog production and declining beef production. Meal price is projected at $162.50 per ton.

Soybean oil use is projected to rise about 2 percent, with price in the 22 cents per pound range. Increased global availability of other vegetable oils and oilseeds are expected to keep prices from rising.

Recovery is expected for foreign oilseed and meal production, following below-average 2002 crops in China, the European Union, India, Canada, and Australia. While world oilseed output rose just 1 percent in 2002-03, relative strong vegetable oil prices and a return to more normal yields this season may result in as much as 5 percent increase in global oilseed output for 2003-04. Expanded production of alternative protein meals may limit the rate of increase in global soybean meal use and trade.

Thus, the analysts say, foreign consumption of soybean meal may grow more moderately this year, compared to a 5 percent to 6 percent increase in 2002-03.

While larger soybean crops in South America are still likely, acreage may not expand quite as rapidly in recent years because of a weaker price outlook, but near-record carryover stocks will again make Brazil and Argentina “potent competitors” in the international export market.

Imports of soybeans and meal by the European Union — still the world's largest market — are expected to continue to show little growth, and greater availability of domestically produced rapeseed and sunflowerseed meals will limit growth in their imports. Reduced livestock feeding in the EU will also cut into demand for protein meal.

Much of the world's growth in soybean demand in 2003-04 will come from China and other Asian markets, the USDA analysts say, with “impressive growth rates” also in Latin America, the Middle East, and North Africa.

“The big driver for soybean exports has been China,” says Riley, “and the big story in recent years has been their trend to beans instead of soybean products.”

U.S. soybean exports are project to be up just 1 percent, at 950 million bushels, with world market share at about the 2002-03 level of 41 percent for soybeans and 11 percent for meal.