Despite the severe drought in the Northern Hemisphere this past summer, the global supply of vegetable oils is actually expected to grow in the 2012-13 marketing year. However, the recent unusual activity in the U.S. export market underscores the fact that the market for the various major oil types does not necessarily overlap. U.S. export volumes of soybean oil have been explosive. A comment in a recent report by the German oilseeds analyst Oil World summarized the situation well: “This illustrates that the substitutability of the individual oils is having its limits.”
Consider these statistics. Since the beginning of the marketing year, which began on Oct. 1, U.S. exporters have sold 590,000 tonnes of soybean oil, compared with only 140,000 tonnes at this time last year. In historical terms, these sales levels are not without precedent. In 2009, commitments at this point of the season were 716,000 tonnes, and in 2010 they were even higher, at 796,000 tonnes. This year’s sales are still worthy of attention, though. At this time of year in the previous 10 years – including the extraordinary sales seen in 2009 and 2010 – commitments averaged only 312,000 tonnes by the beginning of December.
The USDA had been forecasting surprisingly low U.S. final sales for 2012-13. Until now, the estimate for the whole season was below year-to-date commitments. In the December crop report, the estimate finally caught up to reality, to some degree. The estimate was revised up by more than 50%, to 820,000 tonnes. That compares with final sales of 660,000 tonnes for 2011-12, but is considerably below 2010-11 sales of 1.47 million tonnes. Average final sales for the previous 10 years were 932,000 tonnes. We believe it is unlikely that sales will not exceed the 10-year average, given that sales to date are already double the 10-year average.
After suffering through a scorching drought this past summer, the 2012-13 U.S. soybean crop harvested in the fall turned out much better than anybody believed it could. The November USDA crop report raised its estimate for the crop to 80.86 million tonnes, which is 10% above the lowest estimate of the season.