USDA Raises Estimates for Soybean Oil in Biofuel Production

The United States Department of Agriculture (USDA) has revised its projections for the use of soybean oil in biofuel production for 2023-24. The latest World Agricultural Supply and Demand Estimates (WASDE) report, released on October 12, also revealed an upward revision for the 2022-23 period.

For the 2023-24 period, the USDA now forecasts that 12.8 billion pounds of soybean oil will be utilized for biofuel production, a rise from last month's estimate of 12.5 billion pounds. Simultaneously, the estimate for 2022-23 has been increased to 12.1 billion pounds, up from the September prediction of 11.8 billion pounds. For comparison, approximately 10.379 billion pounds of soybean oil were used for biofuel production in 2021-22.

However, the report also indicates a decline in the forecasted U.S. soybean production for 2023-24, now pegged at 4.1 billion bushels, a decrease of 42 million due to reduced yields. The harvested area remains unchanged at 82.8 million acres, with the soybean yield projected at 49.6 bushels per acre. The most significant changes in production are expected to occur in Kansas, Michigan, and Nebraska.

Despite lower production levels, a rise in beginning stocks partly offsets the impact, resulting in a reduction of supplies by 24 million bushels. Increased competition from South America has led to a decline in soybean exports by 35 million bushels to 1.76 billion. Meanwhile, the soybean crush is projected to rise by 10 million to 2.3 billion bushels, fueled by increased soybean meal exports and domestic soybean oil demand.

The report also highlighted that the ending stocks are expected to remain unchanged from last month at 220 million bushels, despite lower exports, due to an increase in crush.

On the pricing front, the U.S. season-average soybean price for 2023-24 remains steady at $12.90 per bushel. There is no change in the prices of soybean meal and oil, which stand at $380 per short ton and 63 cents per pound, respectively.

The global soybean crush has been increased by 800,000 tons to 328.5 million tons due to higher crush rates in China and the U.S. China's crush has been raised by 1 million tons to 97 million tons, aligning with increased domestic soybean meal demand in the prior marketing year. However, this has been partly offset by reduced crush rates in India and Pakistan due to lower supplies.

Finally, global soybean ending stocks have been lowered by 3.6 million tons to 115.6 million, primarily due to lower stocks in China, Brazil, and India.