-NOPA Nov soybean crush lower than expected
-NOPA Nov soybean oil stocks lower than expected
-Soybean oil yield declines from lofty Oct levels, but still record for Nov
NOPA reported its members crushed 179.5 million bushels of soybeans in November, below average market expectations of 181.6 million, down from 184.0 million in October and below last year’s 181.0 million. The continued very strong crush margin structure was expected to result in another month of record crush, and while only slightly below year ago levels, November crush fell short of expectations. Based on the recent-month relationship between NOPA and nationwide crush, today’s data implies U.S. total crush in November was around 191.5 million bushels vs 196.9 million in October and 191.0 million bushels last year, potentially still a record for the month as the difference between nationwide crush and NOPA crush has increased a bit over the last year. Additionally, last month’s NOPA report (October data) reflected the withdrawal of one member from reporting, while nationwide crush was 7.0% larger than NOPA, larger than the average 6.3% difference over the previous six months and implying a roughly 7% difference between the two may need to be assumed moving forward. Accordingly, we currently see 1st quarter (Sept-Nov) U.S. soybean crush around 553 million bushels vs last year’s 559 million, leaving 2nd-4th quarter crush needing to total 1.637 billion bushels in order order to reach the USDA’s 2.190 billion bushel annual estimate, which would be up 3.5% (55 million bushels) from last year’s 1.582 billion.
NOPA reported its members produced 2.110 billion pounds of soybean oil in November, down from 2.187 billion in October and nearly unchanged from last year’s November production 2.105 billion. Similar to the situation with crush, the withdrawal of one NOPA-reporting member last month resulted in nationwide soybean oil production being 7.3% larger than NOPA-reported production vs the 6.5% difference over the previous six months, prompting ideas of total U.S. soybean oil production in November around 2.264 billion pounds vs 2.348 billion in October and 2.282 billion pounds last year. The average soybean oil yield among NOPA members declined to 11.76 pounds/bushel from the very-high 11.89 in October, but was still a record for the month of November and significantly above last year’s 11.63 pounds/bushel. Additionally, soybean oil yields historically have regularly declined from October to November, having done so in each of the last 10 years, so we do not see the dip being a warning sign of a potential change in our view of 2021/22 average yields proving larger than the USDA’s current 11.75 pound/bushel assumption. On that front, we estimate the nationwide November soybean oil yield being around 11.79 pounds/bushel based on the recent-month relationship between NOPA and U.S. totals. Following the October average yield of 11.92 pounds/bushel reported by USDA in the latest Oilseeds Crushings report, the Oct-Nov average yield would be 11.86 pounds/bushel vs last year’s 11.58 and would easily be a record for the two-month period, exceeding 2012/13’s previous 11.70 record. The following chart shows the relationship between the Oct-Nov average soybean oil yield and the marketing year average yield, again highlighting the extremely strong relationship between the two factors. Based on this year’s situation, using the 2017/18-2019/20 period as a proxy, the 2021/22 average yield looks very likely to prove to be around 11.85-11.87 pounds/bushel vs last year’s 11.73 average and the USDA’s current 11.75 assumption. If this is the case, using the USDA’s current 2.190 billion bushel crush estimate, 2021/22 soybean oil production would be around 240 million pounds larger than USDA is projection. Using our 2.205 billion bushel crush estimate, production would be more than 400 million pounds larger than USDA. On a final comment on the topic, it is interesting to note the marketing year average soybean oil yield over the last three years has essentially been identical to the Oct-Nov average, but in the 10 years prior, the marketing year yield averaged .08 pounds/bushel above the Oct-Nov average – which would imply the potential for an 11.90+ pounds/bushel average yield this year if that proves to be the case again.
NOPA reported soybean oil stocks at the end of November held by its members were 1.832 billion pounds, essentially unchanged from 1.835 billion in October, but still significantly above last year’s 1.558 billion and easily the highest for the month in nine years. However, with crush being lower than expected, it’s not surprising soybean oil stocks were also below average market expectations of 1.903 billion pounds, as well. Based on the recent-month relationship between NOPA stocks and nationwide stocks, while also making a minor adjustment for the withdrawal of the NOPA-reporting member last month, we would estimate U.S. total soybean oil stocks at the end of November being around 2.390 billion pounds vs 2.386 billion in October and 2.111 billion pounds last year.
NOPA reported its members produced 4.202 million tons of soybean meal in November vs 4.289 million in October and 4.282 million tons last year. The average soybean meal yield among NOPA members was 46.83 pounds/bushel vs 46.62 in October and 47.31 in November last year, putting the average yield during Oct-Nov this year at 46.73 pounds/bushel vs 47.12 last year and the 2nd lowest of the last 20 years. In a similar, but converse, situation with soybean oil yields, the relationship between the Oct-Nov average yield and the marketing year average yield would imply the 2021/22 average soybean meal yield may be closer to 46.90 pounds/bushel than the USDA’s current 47.22 assumption and down from last year’s 47.40. If so, 2021/22 soybean meal production would be roughly 350k tons less than USDA’s current 51.709 million ton estimate, based on their 2.190 billion bushel crush estimate, and a much smaller overall impact than the soybean oil situation.
