KANSAS CITY, MISSOURI, US — Barring unexpectedly heavy Chinese purchases of US soybeans or a weather threat to the 2020 soybean crop, food industry ingredient buyers may expect to see relatively low, which is to say favorable, soybean oil prices continuing into the fall, Paul Meyers, vice president, commodity analysis, Foresight Commodity Services, Inc., told executives participating in the Sosland Publishing Purchasing Seminar webinar on June 1.

Meyers pointed out that soybean and soybean oil prices already were low. Amid ample US and world supplies, the average soybean futures level in April was near the lowest seen in 12 years.

Soybean oil futures in April averaged about 26¢ a pound, Meyers said. The last time April prices were so low was 14 years ago, he added. Meyers said for the ingredient buyer, soybean oil futures at 25¢ to 27¢ a pound is a very good value, even if futures move lower in the next couple of months.

Meyers said he expected US soybean production in 2020 to rebound to about 4.14 billion bushels compared with 3.557 billion bushels in 2019, assuming normal weather. He pointed out South America was harvesting a record crop this year and may harvest yet another record crop in 2020-21. Supplies will remain plentiful worldwide even if not at a record level in the United States.

Meyers said he expected US soybean exports in 2020-21 to total about 1.95 billion bushels compared with his forecast of 1.625 billion bushels in the current year. Much hinged on how much US soybeans China will buy. Meyers said assuming no further breakdown in trade relations, he thought China may buy 23 million to 24 million tonnes of US soybeans in 2020-21 compared to perhaps 15 million tonnes in 2019-20 but far below the 45 million tonnes in the US-China phase one agreement.

Meyers projected the US carryover of soybeans on Sept. 1, 2021, at around 546 million bushels compared with his forecast for the current year at 621 million bushels.

Soybean oil supplies in 2020-21 should be around 27.335 billion pounds, Meyers said, compared with his forecast for the current year at about 26.745 billion pounds.

Steadily increasing use of soybean oil for biodiesel manufacture in recent years has helped underpin soybean oil prices. Despite a slow couple of months because of the coronavirus pandemic reducing the number of miles driven, Meyers pointed out biodiesel production was on the rise again. He forecast soybean oil use for biodiesel manufacture in 2020-21 at about 8 billion pounds in 2020-21 compared with 7.5 billion pounds in 2019-20 and 7.863 billion pounds in 2018-19.

He forecast the soybean oil carryover on Oct. 1, 2021, at 2.135 billion pounds, up from his forecast for 2020 at 1.995 billion pounds.

Bottom line, soybean and soybean oil supplies should be larger in the coming year compared with 2019-20, and prices should remain under pressure.

Meyers forecast nearby soybean futures to average between $8.35 and $8.50 a bushel in the second quarter of 2020 compared with $8.93 as the January-March average. Nearby futures should average between $8.10 and $8.50 a bushel in July-September and between $8 and $8.40 in October-December.

Meyers forecast nearby soybean oil futures to average between 25.8¢ and 27.3¢ a pound in the second quarter of 2020 compared with 30.1¢ as the average for January-March. Nearby soybean oil futures should average between 25¢ and 26.5¢ a pound in July-September, and between 24.7¢ and 26.2¢ in October-December.