-May soybean crush in line with expectations
-May soybean oil stocks in line with expectations-May corn for ethanol usage supports USDA annual demand target
USDA reported U.S. soybean crush in May was 173.5 million bushels, exactly in line with average market expectations of 173.4 million, up slightly from 169.9 million in April, but 3.4% below last year’s May crush of 179.6 million bushels, reflecting the 4th consecutive month of reduced year-over-year crush activity. Over the last four months (Feb-May), soybean crush totaled 695.9 million bushels vs 730.4 million during the same period last year, a 34.5 million bushel (4.7%) reduction. 2020/21 marketing year to date crush of 1.644 billion bushels compares to 1.628 billion last year, leaving June-August crush needing to total 531 million bushels vs last year’s 536 million in order to reach the USDA’s 2.175 billion bushel annual estimate – a reduction of only 1%. With crush running nearly 5% below year ago levels over the last four months and last year’s June-Aug crush being record high, it certainly appears the USDA’s estimate is in need of a downward revision. If crush runs 3% year ago levels during June-Aug, the USDA’s estimate would prove 10 million bushels too high, while a 5% decline would require a roughly 20 million bushel reduction. USDA reported U.S. soybean oil production in May was 2.043 billion pounds vs 1.992 billion April and only slightly less than last year’s 2.058 billion pounds, as yields continue to run historically high at 11.78 pounds/bushel for the month vs 1.73 in April and 11.46 lbs/bu last year May. USDA reported end May U.S. soybean oil stocks were 2.147 billion pounds, exactly in line with average market expectations of 2.144 billion pounds and were down modestly from April’s 2.178 billion, but solidly below last year’s 2.445 billion pounds. While May SBO stocks technically were the 2nd lowest of the last 16 years, only above 2019’s 2.019 billion bushels, they are comfortably within the range of May stocks over the last 8 years of 2.019-2.466 billion pounds. Based on estimated May exports, domestic usage for the month was implied up roughly 7% from last year, with marketing year to date domestic usage now up 10% year-over-year vs USDA estimating 2020/21 domestic usage to be up 6.8%. Countering the solid domestic usage, though, is the continued anemic export program which appears to require another downward revision from the USDA. USDA reported May soybean meal/hull production was 4.123 million tons vs 4.045 million in April and 4.241 million tons last year. Soybean meal stocks are not typically watched much given their minimal levels, but interestingly popped up to 642k tons from 452k in April, the highest reported stocks in any month since USDA resumed monthly crush reports in 2015 after having been eliminated for several years due to budget constraints. Based on estimated exports, May soybean meal domestic usage was implied down 3.1% from last year vs April down 4.6%, with marketing year to date SBM domestic usage exactly in line with last year vs USDA estimating 2020/21 total domestic usage up a minor 0.6% from last year.
USDA reported 447.6 million bushels of corn was used for ethanol production in May vs 408.4 million bushels in April, 301.2 million bushels last year and 459.5 million bushels in May 2019. With May data, 2020/21 marketing year to date corn for ethanol usage of 3.721 billion bushels is up 2.2% from last year’s 3.641 billion and compares to 2018/19’s 4.016 billion bushels. Accordingly, in order to reach the USDA’s 5.050 billion bushel corn for ethanol usage estimate, June-Aug usage would need to total 1.329 billion bushels, 9.3% above last year’s 1.216 billion and 2.4% below 2018/19’s 1.362 billion bushels. Based on these needed corn usage targets and updating for recent yield performances and corn’s percentage of total feedstock usage, we now estimate weekly ethanol production needs to run roughly 8.9% above last year and 2.8% below 2019 levels during July-August to reach the USDA’s 5.050 billion bushel corn for ethanol usage estimate. Over the last four weeks, ethanol production has averaged 2.6% below 2019 levels and is back to roughly 17% above year ago levels as the COVID-shock recovery continued last year. We were able to adjust these ideas a bit more closely with the release of today’s report as USDA provided the first monthly sorghum usage in ethanol production data in 10 months as usage since last August was deemed too low to keep data confidential. With USDA indicating 0.3 million bushels of sorghum was used for ethanol production in May, the assumption can be made monthly usage from August through April was lower than that, resulting in corn’s portion of total feedstock usage being slightly higher than previously assumed. All in all, the recent pace of ethanol production supports the USDA’s current corn for ethanol usage estimate, with the key metric to continue watching being weekly ethanol production relative to 2019 levels over the final two months of the marketing year. USDA reported 1.939 million tons of DDGS were produced in May vs 1.768 million in April and 1.240 million last year, putting 2020/21 corn marketing year DDGS production at 15.8 million tons vs 15.1 million tons last year.
