-July soybean crush slightly higher than expected
-July soybean oil stocks in line with expectations
-July corn for ethanol usage slightly higher than anticipated – supports USDA annual estimate
USDA reported U.S. soybean crush for the month of July was 184.5 million bushels, slightly above the average trade estimate of 183.0 million bushels (179.2-184.0 million range of ideas) and was up solidly from 177.3 million bushels in June and 2.8% larger than last year’s July crush of 179.5 million bushels, setting another new monthly record. With only one month of official data remaining for the 2019/20 marketing year, cumulative crush of 1.990 billion bushels compares to last year’s Sept-July crush of 1.914 billion bushels. Based on the USDA’s 2.160 billion bushel annual crush estimate, August crush would need to be only 170 million bushels, solidly below last year’s 177.8 million and implies the USDA’s estimate is likely too low. If August crush exceeds last year by 3%, comparable to the July increase, 2019/20 crush would be 2.172 billion bushels, 12 million above the USDA’s current estimate. Accordingly, we anticipate USDA raising their crush estimate in the September 11 WASDE report by around 10 million bushels. USDA reported U.S. soybean oil production in July was 2.122 billion pounds vs 2.035 billion in June and 2.090 billion last year, with the average yield for the month ticking up to 11.50 pounds/bushel from 11.48 in June, but remaining well below last year’s July yield of 11.65 pounds/bushel. With the warm temperatures this summer, we would anticipate the 2020/21 soybean oil yield moving higher as the 2019/20 average yield through July has been only 11.45 pounds/bushel vs 11.61 for the entirety of the 2018/19 crop year. USDA reported end July U.S. soybean oil stocks were 2.124 billion pounds, in line with average market expectations of 2.131 billion pounds (2.100-2.175 billion range of ideas), but down modestly from 2.271 billion in June. However, July soybean oil stocks were still above last year’s 2.040 billion pounds and held with the range of July stocks over the last seven years of 1.976-2.384 billion pounds. Based on estimated July exports, soybean oil domestic usage for the month was implied up roughly 7% from last year after April-June domestic usage was essentially unchanged year-over-year. However, we would caution that monthly implied SBO domestic usage has varied substantially of late, with even the last three months’ data deviating from 12% below to 18% above last year. Marketing year-to-date domestic usage has been roughly 2% below year ago levels vs the USDA’s current 3.8% estimated decline. USDA reported U.S. soybean meal/hull production in July was 4.361 million tons vs 4.167 million in June and 4.186 million tons last year. Based on estimated exports, July soybean meal domestic usage was implied down roughly 5% from last year after April-June domestic usage ran 5-13% above last year. 2019/20 marketing year to date implied domestic usage is up 4.9% from last year vs USDA currently estimating a 4.7% increase from last year.
USDA reported 424 million bushels of corn was used for ethanol production in July, continuing the recovery from the post-COVID shock low of 245 million bushels in April and up from 379 million bushels in June, but still 26 million bushels (5.9%) below last year’s 451 million bushels. However, it was slightly larger than we anticipated based on the EIA’s weekly ethanol data production numbers and also continues to be positively influenced by the minimal amount of sorghum being used for ethanol production of late. While ethanol production averaged roughly 10.7% below last year in July based on the weekly EIA data, corn usage was down only 5.9% as a mere 1.7 million bushels of sorghum was used in the month vs 9.7 million bushels a year ago. The 8 million bushel reduction in sorghum translates directly to higher corn usage, offsetting some of the impact of the lower ethanol production. Over the last three months combined, only 7.6 million bushels of sorghum was used for ethanol production vs 27.7 million during the same period last year. Based today’s data, 2019/20 marketing year-to-date (Sept-July) corn for ethanol usage of 4.434 billion bushels compares to last year’s 4.923 billion bushels and leaves August usage needing to total 416 million bushels in order to reach the USDA’s 4.850 billion bushel annual estimate vs last year’s 455 million bushels, an 8.6% decline. Through the first three weeks of August, according to the EIA’s weekly ethanol production data and our calculations, implied corn for ethanol usage has run roughly 8.4% below last year, essentially on target with the USDA’s current estimate. Accordingly, without any surprises in the next two weeks’ EIA data, it appears 2019/20 corn for ethanol usage should prove to be within 10 million bushels or so of the USDA’s expectations.