-August soybean crush slightly lower than expected
-End August soybean oil stocks lower than “expected”-August corn for ethanol usage confirms minor reduction in USDA 2018/19 estimate forthcoming
U.S. soybean crush for the month of August was 177.5 million bushels, slightly below average market expectations of 179.0 million bushels (178.2-180.0 million range of ideas) and down slightly from July crush of 179.5 million. However, August crush was solidly above last year’s 169.6 million and put 2018/19 marketing year total crush officially at 2.092 billion bushels vs the USDA’s last balance sheet estimate of 2.085 billion. Accordingly, a 7 million bushel increase will be reflected by USDA in the upcoming October 10 WASDE report. USDA reported August soybean oil production was 2.050 billion pounds vs 2.090 billion pounds in July and 1.945 billion last year August, with the average yield of 11.55 pounds/bushel down from July’s 11.65, which appeared to be a statistical adjustment to the unexpectedly low 11.49 in June, and compared to 11.47 last year August, as the 2018/19 marketing year to date average yield of 11.60 pounds/bushel compares to last year’s Oct-Aug average of 11.43. USDA reported end August U.S.-wide soybean oil stocks were 1.806 billion pounds, solidly below average market expectations of 1.974 billion (1.955-2.000 billion range of ideas), down notably from 2.040 billion in July, considerably below last year’s August stocks of 2.215 billion pounds and are in line with August 2017 stocks of 1.810 billion pounds. Based on estimated exports, soybean oil domestic usage in August is implied up 13-14% from last year vs up 6% in July, with June-August domestic up an estimated 5% year-over-year. Marketing year-to-date SBO domestic usage is up 9.2% from last year vs USDA’s current 6.9% estimated increase for the entirety of 2018/19. The average estimate of August soybean oil stocks of 1.974 billion pounds reflected U.S.-wide stocks nearly 41% above NOPA-member stocks, which would have been a near the record difference and implied the average estimate likely was too high to be realistic. While July SBO stocks were 39.0% larger than NOPA, they have averaged 30% above NOPA-reported stocks for 2018/19. Nonetheless, the SBO stocks number will likely be deemed supportive as it was “lower than expected” even though at 29.0% larger than NOPA stocks, they were in line with historical relationship to the already-reported NOPA stocks number. USDA reported U.S. soybean meal production in August was 4.151 million tons vs 4.186 million in July and 4.031 million tons last year August, while August SBM domestic usage was implied up 1-2% from last year, based on estimated exports, vs July up nearly 9% and June-August up 3.3% on average year-over-year. Marketing year-to-date SBM domestic usage is up 1.4% from last year vs the USDA’s 2018/19 estimate of 35.9 million tons reflecting a 1.1% increase year-over-year.
The USDA reported 454.6 million bushels of corn was used for ethanol production in August vs 450.8 million in July and 483.4 million bushels last year August, putting 2018/19 official marketing year total corn for ethanol usage at 5.371 billion bushels vs the USDA last balance sheet estimate of 5.375 billion bushels, indicating a slight downward revision is forthcoming in the October 10 WASDE report. For the year, corn for ethanol usage was down 234 million bushels (4.2%) from 2017/18. USDA reported sorghum used for ethanol production in August was a 27-month high at 10.9 million bushels, leaving corn to account for 97.7% of total feedstocks used, the lowest percentage in 27 months, as well. Pending official August ethanol production data from the EIA, we preliminarily figure the ethanol/corn yield for the 2018/19 marketing year averaged 2.89 gallons/bushel vs 2.85 in 2017/18. Looking forward, based on the USDA’s current 2019/20 corn for ethanol usage estimate of 5.450 billion bushels, U.S. weekly ethanol production will need to run roughly 2.2% above last year’s pace on average, reflecting the need for a considerable improvement from the 4.2% year-over-year decline experienced, on average, over the most-recent 10-week period.