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Oil Crops Outlook Summary: May 2022

Core Content

The Economic Research Service (ERS) report, Oil Crops Outlook: May 2022, provides a comprehensive analysis of global and U.S. oil crop production, consumption, and trade trends for the 2022/23 marketing year. It highlights the rebound in oilseed production and crush volumes, driven by improved weather conditions, higher demand for oil and meal products, and policy changes affecting biofuel usage.

Main Points

U.S. Soybean Outlook

• Crush Volume: The U.S. soybean crush forecast for 2022/23 is 2,255 million bushels, an increase of 1.8% from the 2021/22 projection.
• Prices:
  • Soybean prices are forecast at $14.40 per bushel, up from $13.25 in 2021/22.
  • Soybean meal prices are expected at $400 per short ton, and soybean oil at $0.70 per pound.
• Production:
  • U.S. soybean production is projected at 4,640 million bushels, up 205 million bushels from 2021/22.
  • Harvested area is expected to increase slightly, with 51.5 bushels per acre yield.
• Exports and Imports:
  • U.S. soybean exports are forecast to rise by 60 million bushels to 2,200 million.
  • Soybean meal exports are expected to increase by 0.4 million short tons to 14.4 million.
  • Soybean oil exports are anticipated to decrease due to higher domestic demand.

U.S. Canola Outlook

• Production: U.S. canola production is forecast to increase by 260 million pounds to 1,157 million pounds.
• Crush Volume: Canola crush is expected to rise to 4,460 million pounds, with 85% of the supply being crushed.
• Imports: Canola imports are expected to increase slightly, supporting domestic crush and meeting rising demand.
• Oil and Meal Use:
  • Canola oil production is projected at 1,923 million pounds, up 400 million pounds from 2021/22.
  • Canola meal production is forecast at 1.311 million short tons, up 0.21 million short tons from 2021/22.
  • Domestic use of canola meal is expected to rise by 13% to 5 million short tons.

Global Outlook

Global Oilseeds Production

• Total Production: Global oilseed production is projected at 647.15 million metric tons, up 8% from 2021/22.
• Soybean:
  • Global soybean production is forecast to reach 394.69 million tons, up 4.75 million hectares or 3.6%.
  • The U.S. is expected to see a 4.4% increase in soybean production, with Argentina and Brazil also showing growth.
• Canola:
  • Global canola production is expected to rise by 9.14 million metric tons to 80.32 million metric tons.
  • European production is near a record 18.5 million metric tons, while Canadian production is forecast at 20 million metric tons.
• Sunflowerseed:
  • Global sunflowerseed production is expected to decline by 6.66 million metric tons to 50.72 million metric tons, mainly due to lower Ukrainian output.
  • Ukraine's sunflowerseed crush is projected to fall to 9.75 million metric tons, down from 12 million.
• Rapeseed:
  • Global rapeseed production is expected to increase by 1.3 million metric tons to 44.07 million metric tons.
  • EU rapeseed production is forecast at 10.5 million metric tons, up slightly from 10.43 million.

Vegetable Oils Outlook

Global Vegetable Oil Production

• Total Production: The production of the four major vegetable oils (soybean, canola, palm, and sunflower) is forecast to reach 190.44 million metric tons, up 6 million metric tons or 3.25% from 2021/22.
• Soybean Oil:
  • Forecast at 61.43 million metric tons, up 2.32 million metric tons from the previous year.
• Canola Oil:
  • Projected at 30.74 million metric tons, up 2.3 million metric tons.
• Sunflower Oil:
  • Expected to decline by 0.77 million metric tons to 19.14 million metric tons.
• Palm Oil:
  • Global production is forecast to rise by 2.18 million metric tons or 2.8% to 79.13 million metric tons.
  • Indonesia and Malaysia are the main contributors to this growth.

Global Vegetable Oil Consumption and Stocks

• Consumption:
  • Global vegetable oil consumption is forecast at 212.92 million metric tons, driven by increases in food and industrial use.
• Stocks:
  • Major vegetable oil stocks are expected to rise from the lowest level in 2021/22 to 28.13 million metric tons.

Key Trends and Impacts

• Demand Growth:
  • Demand for soybean meal and oil is expected to rise, contributing to higher crush volumes.
  • Biofuel demand for soybean and canola oils is projected to increase, although not to 2019/20 levels.
• Weather and Yields:
  • Improved weather and yield conditions are expected to boost production in key regions like the U.S., Brazil, Argentina, and Canada.
  • Drought and low soil moisture in some areas, such as Ukraine and Canada, pose risks to production.
• Trade Dynamics:
  • China is expected to be the largest importer of soybeans and soybean meal, with significant demand for both.
  • EU is a major importer of soybean meal, and its demand is influenced by competitive pricing and domestic livestock output.
  • Australia is projected to export 3.7 million metric tons of canola due to strong demand from China and the EU.

Conclusion

The 2022/23 marketing year is expected to see increased production and consumption of oil crops globally, particularly soybean and canola. While soybean crush margins may cool, they remain historically strong, supporting continued high levels of production and export. Ukraine’s sunflowerseed production is expected to decline, but U.S. canola imports will increase to compensate. Palm oil production and demand are also expected to rise, contributing to a rebound in global vegetable oil stocks. Overall, the report emphasizes the interplay between weather, policy, and market demand in shaping the future of oil crop markets.