The U.S. soybean market is gaining momentum, driven by a bullish combination of renewed purchase commitments from China—following recent trade negotiations—and rapidly expanding domestic crush capacity. Together, these forces have analysts watching for a potential breakout.
According to University of Minnesota (UMn) grain market economist Ed Usset, the latest report from the National Oilseed Processors Association (NOPA)—the national trade association representing the U.S. soybean, canola, flaxseed, safflower seed, and sunflower seed crushing industries—reveals that crush levels surged nearly 5% above expectations.
“The crush was 10 million bushels more than the market expected; it was a big deal. And it kind of throws back to the way I felt about the ethanol market and corn demand 15 to 20 years ago,” Usset explained. He noted that during the ethanol boom, the USDA struggled to keep pace with how quickly production was scaling.
“We’ve got the same thing going on in soybeans right now. We’ve had something like 11 or 12 new plants or major expansions at existing soybean crushing plants open in just the last two and-a-half years, with a few more yet to come.”
Still, Usset emphasizes that China’s recently announced soybean purchase commitments for the next three years remain modest compared to historical volumes. “At the end of the year (assuming an extra 10 million bushels a month) we’ll have crushed 120 million more bushels than we expected, and that’s roughly 10 percent of what we exported to China just three years ago.”
While domestic crush capacity is growing at an unprecedented pace, Usset cautions that it will take time for increased processing to fully offset the decline in U.S. soybean exports.
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Adapted from an article shared by Brownfield News. Image Credit: Pixabay