Economist’s Angle: October WASDE

Oct 13, 2022

By Scott Gerlt • ASA Chief Economist
October’s WASDE contained a surprise for soybean markets. The projected yield for the current crop was dropped by 0.7 bushels per acre. This was the second month in a row USDA came in well below the average industry expectation. Area was left unchanged, resulting in a 65 million bushel decrease in production. This was partially offset by a 34 million bushel increase in beginning stocks. Soybean crushing was raised by 10 million bushels, while exports were reduced by 40 million bushels. The projected farm price was lowered from $14.35 per bushel to $14.00 per bushel.
Brazilian soybean production for 2022/23 was raised by 3 million metric tons to 152 MMT, resulting in a 1.2 MMT increase in world production. Chinese imports were raised 1 MMT to 98 MMT. Ending stocks were raised by 1.6 MMT to 100.5 MMT, which would be above the low level of 92.4 MMT at the end of the last crop year.
The increased soybean meal production (250 thousand tons) for the current marketing year was projected to be entirely consumed domestically. The increase in soybean oil production was mostly offset by a reduction in beginning stocks, resulting in just a 20 million pound increase in supply.
The change in beginning stocks for many commodities for this marketing year is a result of USDA’s September Grain Stocks report. USDA also revised the 2021/22 marketing year soybean yield up 0.3 bushels per acre to 51.7. In addition to the changes in stocks, extra supply was offset by reducing crush by 1 million bushels and increasing exports by 13 million bushels. Soybean oil production was increased slightly while imports were dropped. The result was slightly more food use and lower ending stocks.