-November soybean crush slightly lower than expected
-November soybean oil stocks slightly higher than expected
-Soybean oil yield record high to start 2021/22
USDA reported U.S. soybean crush was 190.5 million bushels, slightly below average market expectations of 191.7 million (189.9-195.7 million range of ideas), down from October crush of 196.9 million bushels and marginally below last year’s November crush of 191.0 million. Total first quarter (Sept-Nov) crush of 551.6 million bushels was slightly below last year’s 558.7 million and will require Dec-Aug crush to total 1.638 billion bushels in order to reach the USDA’s 2021/22 annual estimate of 2.190 billion bushels, which would be 3.5% (56 million bushels) larger than last year’s 1.582 billion bushels during the same period. With the considerable decline in crush last year during the 2nd half of the marketing year given the tight supply situation, we have little concern at this time about reaching the USDA’s annual crush target.
USDA reported U.S. soybean oil production in November was 2.248 billion pounds, down from 2.348 billion in October, but still modestly above last year’s 2.207 billion in November as soybean oil yields continue to run at elevated levels, averaging 11.80 pounds/bushel for the month, down from October’s extremely high 11.92, but still significantly above last year’s Nov yield of 11.55 pounds/bushel. As we mentioned with the release of NOPA data in mid-December, the decline in SBO yields from Oct to Nov is a common occurrence and of little consequence to the big-picture situation of the 2021/22 average soybean oil yield likely proving historically high. With October and November official data now in the books, the 11.86 pounds/bushel average yield for the first two months of the marketing year was easily the highest on record, considerably eclipsing the previous Oct-Nov record average of 11.70 pounds/bushel in 2012/13, which went on to see a marketing year total average yield of 11.82 pounds/bushel. Based on the very strong historical relationship between the Oct-Nov average yield and marketing year total yield, we strongly expect the 2021/22 U.S. soybean oil yield to average somewhere in the 11.86-11.90 pounds/bushel range vs the USDA’s current balance sheet assumption of 11.75 pounds/bushel. Using the USDA’s 2.190 billion bushel crush estimate, 2021/22 soybean oil production would prove around 250-300 million pounds higher than the USDA’s current estimate if the yield situation plays out as we expected.
Despite November soybean crush coming in slightly below expectations, USDA reported end November U.S. soybean oil stocks were 2.415 billion pounds, slightly above average market expectations of 2.391 billion pounds (2.338-2.454 billion range of ideas), up modestly from 2.386 billion pounds in October, significantly above year ago Nov stocks of 2.117 billion pounds and easily the highest for the month in nine years going back to 2012/13. Based on estimated November exports (official data to be available January 6), implied domestic soybean oil usage for the month was up 6-7% from last year and followed October domestic usage up 2.7% year-over-year. Through the first two months of 2021/22, it appears domestic soybean oil usage is running a bit below the USDA’s current annual ideas for a 7.8% increase from last year.
USDA reported November U.S. soybean meal/hull production was 4.470 million tons vs 4.592 million in October and 4.516 million tons last year, with the average soybean meal yield ticking up to 46.93 pounds/bushel in November from 46.63 in October, but still below last year’s 47.28 for the month as SBM and SBO yields work in opposite directions. In the same vein as our look at soybean oil yields, the Oct-Nov average soybean meal yield of 46.78 pounds/bushel implied a potential 2021/22 marketing year average yield around 46.95 pounds/bushel vs USDA’s current balance sheet assumption of 47.22 and last year’s 47.39. The difference between our annual yield ideas and the USDA’s current estimate, using their 2.190 billion bushel crush estimate, only amounts to roughly 300k tons of production, very small in context of annual production around 51.7 million tons. Based on estimated exports, November soybean meal domestic usage was implied up 2-3% from last year and following October’s 1.2% decline from last year. Accordingly, through the first two months of 2021/22, SBM domestic usage appears to be up marginally from last year, comparable to the USDA’s current balance sheet ideas reflecting an expected less than 1% increase for the year.