CHAMPAIGN, Ill. – China’s strong demand for soybeans will keep stocks tight and prices at generally high levels.

China is projected to import 2.5 billion bushels of soybeans this year, representing two-thirds of the soybeans traded and 24 percent of the soybeans produced worldwide.

“The deciding factor on exports has been China. Even with large South American crops and large U.S. crops, we’re not seeing a buildup in soybean inventory due to the demand from China,” said Darrel Good, University of Illinois Department of Agricultural and Consumer Economics professor emeritus. “We have seen soybean exports maintained at very large levels.

“The decline last year was basically because we ran out of soybeans. We didn’t have many more soybeans available for export than what we shipped,” he said.

Soybean sales have been moving at rapid pace as 96 percent of the projected exports have been sold with 35 weeks still remaining in the marketing year. China has accounted for about 93 million bushels of U.S. soybean export sales this year.

Total U.S. soybean exports for the current year are projected at 1.475 billion bushels, up from 1.32 billion last year.

“On the surface, one would say either USDA has underestimated export demand or prices have to move higher to shut that off or China is going to cancel some of their purchases,” Good said at the Illinois Farm Economics Summit.

“The big issue in the soybean market right now is if the South American crop turns out to be as large as we think it is — and if the soybean prices go lower, will we see some cancellation of those U.S. purchases?

“The market seems to think that is the case at this point and foresees cancellation of sales as we move forward.”

One factor that has changed in the soybean market the last couple of years has been the increased production of biodiesel.

“There’s been a fairly sizeable increase in the use of soybean oil for biodiesel. It is expected to go up again in 2014, but that projection is questionable now because of the EPA proposal to scale back the mandate,” Good said.

The economist doesn’t foresee any major changes in the current soybean prices unless there is a major drop in demand.

Soybeans have averaged $11.52 per bushel since December 2006. Most recently, prices have been above that average and are now beginning to move lower.

Good said there are several reasons soybean prices have remained at slightly higher levels relative to corn.

Soybean production dropped to 3.034 billion bushels in the 2012 drought, and this year’s estimate is 3.258 billion bushels.

“We’re not seeing as large of a rebound in production in 2013. The crop is large, but it is not a record large and only marginally larger than we’ve had the last few years,” Good said. “We’re not putting as much supply pressure on the soybean market in recent months as we have the corn market.”

Ending soybean stocks are estimated at 150 million bushels, 9 million more than in 2012-2013.

The USDA estimates 75.7 million harvested acres for soybeans this year, down from 76.2 million acres in 2012.

“I think we will see a tick-up in soybean acres in 2014. How much is needed will be a function of how big the crop in South America turns out to be,” Good said. “Prices, right now at the margins, are encouraging some increase in soybean acres at the expense to second-year corn or continuous corn.

“If acreage goes up and there are trend yields of 44 bushels in 2014, we’re looking at a sizeable soybean crop. We would expect to see this pattern of tight year-end stocks reverse a little bit and probably move back into a minor buildup of soybeans.”

The average price for the current marketing year is projected to average $12.50 per bushel, and Good estimated prices will move down to $11 to $11.50 next year.