World soybean stockpiles might be smaller than they seem: Braun

(The opinions expressed here are those of the author, a market analyst for Reuters.)

NAPERVILLE, Illinois, March 11 (Reuters) – Every oilseed trader is familiar with the present narrative: the world is awash with soybeans.

It’s true, global soybean stocks are set to hit record highs later this year. The situation is not exactly tight. But supplies are now expected to fall well short of previously predicted levels.

Further, when compared against demand, the supply picture is nearly identical with a year ago, though prices are much lower today.

The U.S. Department of Agriculture on Tuesday cut 2024-25 world soybean ending stocks to 121.4 million metric tons from 124.3 million last month. Analysts had expected a slight increase from February, though the actual figure landed below all trade estimates.

Stronger consumption in China and Argentina drove this month’s supply cuts, though the resulting stocks would still be up nearly 8% on the year.

However, the outlook was far more burdensome a few months ago.

USDA in October had pegged a 20% year-on-year surge in world soybean stocks for 2024-25, which ends in September. The 13-million-ton-plus decline since then owes to smaller crops and larger demand, the latter likely encouraged by lower prices.

Chicago soybean futures are currently similar to those from October, but the October 2024 prices were 22% lower than in October 2023.

In December 2024, soybean prices sank to the lowest levels in more than four years.

Most-active CBOT soybeans on Tuesday settled at $10.11-1/4 per bushel. That is almost 15% lower than on the comparable day a year ago, when USDA pegged 2023-24 global soybean stocks-to-use at 20.57%.

But Tuesday’s projections put 2024-25 stocks-to-use ever so slightly lower at 20.54%, down significantly from February’s 21.14% and October’s season-high estimate of 23.05%.

The October figure would have had 2024-25 stocks-to-use essentially tying 2018-19’s all-time high. Instead, the ratio is projected just above 2023-24’s final of 20.03%, which was the highest since 2018-19.

For context, the five-year average is 18.7% with a low of 17.8% in 2021-22, meaning the 2024-25 projections are on the heavier side of history.

But they are certainly less roomy than earlier predictions given 2024-25 global soybean consumption is set to rise 6.4% on the year, the largest annual gain in a decade.

Large speculators briefly adopted a bullish soybean stance earlier this year, though they flipped back to the bearish side at the start of this month.

But could declining world soybean supply estimates eventually re-ignite bullish sentiment? Early 2025-26 estimates suggest the U.S. farmer could play to this narrative.

USDA last month suggested a contraction in U.S. soybean supplies into 2026 based on smaller plantings in 2025, though some analysts think corn could rob even more soybean acres than the agency proposed.

Brazil is currently harvesting a record soybean crop, but weather troubles in the south may have capped further output gains. It is yet to be seen if recent rains can significantly enhance Argentine harvest estimates.

Brazilian farmers have the capability in 2025-26 to make up for any perceived soybean shortfalls in 2024-25. Soybean plantings there have risen for 18 consecutive years.

China remains the wildcard, as slowing economic growth has soured the demand outlook, especially in the longer term. However, a trade war with Canada, the top supplier of rapeseed and rapeseed meal, could eventually impact China’s soybean needs.

Hopeful soybean bulls may be able to take solace in the fact that futures rarely set yearly highs in the beginning months of the year. But with heightened geopolitical and economic uncertainties, it’s entirely possible that 2025 is marching to the beat of its own drum. Karen Braun is a market analyst for Reuters. Views expressed above are her own.