2025 Soybean Outlook: Well-supplied market pressures prices

PEORIA, Ill. — Global soybean supplies that are already at high levels are expected to grow in the first months of 2025.

“You have to be sort of less bullish given the very, very narrow trading range that we’ve been in for the last few months,” said Joe Janzen, University of Illinois agricultural economist.

Brazil farmers begin their soybean harvest in January with production estimated at 169 million metric tons, or nearly 6.210 billion bushels.

“With that big Brazilian crop coming, the world supply-demand situation is already at very high stocks levels, and that is expected to grow through this next marketing year. Every Brazil crop estimate that we’ve seen come out is inching higher. We’re going to get some confirmation on that in January,” Janzen said.

Brazil also continues to add large chunks of soybean acreage each year.

“The big thing weighing on the soybean market and why we see strength for corn relative to soybeans is we’ve seen almost 20 years of year-over-year growth in Brazilian soybean acres,” Janzen said.

“They’re adding three million, four million acres every year of soybeans, partly because they’ve been able to shift corn production to a second crop in the major production region. They’ve also been able to convert a lot of degraded pasture lands to soybean production.

“That will continue to weigh on the market no matter what news we get about weather. They’re adding another three million acres this year. They added five million the year before. They added six million the year before that.

“Even if we don’t plant a single additional acre of soybeans in the U.S., this is going weigh on our prices here.

“The market is certainly saying, ‘We don’t expect the need for higher soybean prices to ration out soybeans anytime soon. The market is well supplied.’”

Demand Pie

Meal production and exports are critical pieces of the soybean demand pie. Soybean meal production represents 45% of demand, exports is 43%, 6% is oil for biofuels and 6% is for oil for food and other uses.

“We’ve heard a lot of talk about a renewable diesel boom, about the importance of biofuels for the soybean market, but it’s important to remember that domestically crushed soybeans for biofuels is only about 6% of the total U.S. soybean volume” Janzen said.

“We’ve seen the smaller portions of the pie get a little bit bigger mainly because of the growth in biofuels, but exports are still critical.

“As we think about how does this supply and demand situation change as we move forward through the remainder of the 2024-2025 marketing year and into marketing the 2025 crop, we should keep those use proportions in the back of our minds.”

There has been some strengthening in domestic crush demand.

“We’ve seen new crush capacity come on line over the last several years. There’s some room for that to continue going into 2025,” Janzen said.

“We have seen exports bounce back from a comparatively poor 2023. There’s been a little bit of strength in demand for U.S. soybeans around the world, but the overall story is one of stock growth.”

There has been a shift in soybean export seasonality trends the last few years.

“The last few months have been pretty positive, but the worry is we see the export sales program turn to what happened last year where over time we’ve seen a change in the seasonality of the soybean market,” Janzen said.

“We’ve typically seen demand for U.S. soybeans is strong up until January or February and then the tap starts to shut off. However, the last couple of years we get to January and the Brazilian soybeans come to the international market and the demand for U.S. soybeans really kind of dried up.

“Soybeans to China is really a two-horse race between the U.S. and Brazil. September through the end of the year, there’s a big movement of U.S. soybeans and then the tap shuts off and all of the movement is dominated by Brazil. The U.S. component of that export picture has shrunk a little bit.”

Balance Sheet

The soybean stocks-to-use ratio was 6.1% in 2022-2023 when the season average price was $14.20 per bushel. It increased to 8.3% in 2023-2024 with an average price of $12.40 per bushel.

USDA’s December supply and demand estimates have a 10.8% stocks-to-use and projected average price of $10.80.

“The amount of inventory we have at the end of the marketing year is growing relative to the amount that we’re using. This market is reasonably well-supplied at anything over a 10% stocks-to-use ratio. We moved there last year,” Janzen said.

“We’re going to grow stocks if we have a normal crop in the U.S. Even with a little growth in domestic crush and exports, we keep growing stocks.

“USDA’s average prices is at $10.80 for this year. It’s hard to sell soybeans at $10.80 in the market. There’s not too many sales, particularly in the last six months.

“The big thing is we keep building stocks and it keeps weighing on the market.”

Marketing

Crop prices have fallen to long-range average levels with the tariff shadow overhead.

“There are a whole set of threats, especially geopolitical, that could mean lower prices in the short run. You want to look for opportunities, have a marketing plan that commits you to action if we do get rallies,” Janzen said.

“The wins are going to be relatively small. So, it’s not going to be $1 a bushel or $2 a bushel. We’re thinking more like 25- to 50-cent rallies are opportunities to make grain sales.

“More sophisticated marketing tools do not automatically produce wins. That’s what our date from the Illinois Farm Business Farm Management shows.

“If we’re thinking about post-harvest grain marketing in particular, weigh the full cost of making that decision. All gains and losses must be calculated net for the full cost when storing grain.”