-September soybean crush in line with expectations
-September soybean oil stocks slightly higher than expected – solidly above USDA ending stocks estimate-September corn for ethanol usage nearly unchanged from last year despite lower ethanol production
USDA reported September U.S. soybean crush at 171.1 million bushels, right in line with average market expectations of 171.3 million (170.9-172.0 million range of ideas), reflecting a slight decline from 174.7 million in August but solidly above year ago Sept crush of 162.3 million bushels and a new record for the month in exceeding 2018’s 169.6 million bushels. U.S.-wide crush in September was 5.9% larger than NOPA-member crush of 161.5 million bushels, largely in line with 6.1% average deviation over the previous four months and the 5.8% deviation in August. With September representing the first month of the 2020/21 marketing year, Oct-Aug crush will need to total 2.009 billion bushels in order for the USDA’s 2.180 billion bushel annual crush estimate to prove accurate, marginally larger than last year’s record 2.002 billion bushels for the period. USDA reported U.S. soybean oil production in September (the last month of the 2019/20 marketing year) was 1.968 billion pounds vs 2.013 billion in August and 1.901 billion pound last year, putting 2019/20 total production at 24.910 billion pounds vs the USDA’s last balance sheet reflection of 24.890 billion pounds and last year’s 24.197 billion pounds. The average soybean oil yield in September held mostly steady at 11.50 pounds/bushel vs 11.52 in August and finishing the year well below last year’s 11.71 as has been the case throughout 2019/20. The average soybean oil yield for the 2019/20 marketing year ended up at 11.46 pounds/bushel vs 11.61 in 2018/19 and the 11.56 pound/bushel average over the previous four years. We will be closely watching early soybean oil yield calculations for October and November as new crop soybeans work their way into crush facilities as yields in the initial months of the marketing year hold strong correlations with those for the entire year – providing us a good early feel for what to expect for yields for 2020/21.
USDA reported end September U.S. soybean oil stocks were 1.849 billion pounds, slightly above average market expectations of 1.826 billion pounds (1.764-1.875 billion range of ideas) and down modestly from August stocks of 1.942 billion (revised down from 1.958 billion initially reported). More importantly, though, September stocks, reflecting 2019/20 ending stocks, were solidly above the USDA’s last official old crop ending stocks estimate of 1.740 billion pounds and will add 109 million pounds to the 2020/21 balance sheet from last month’s estimate when USDA releases this month’s WASDE report on Tuesday, November 10. Based on estimated September exports (official data will be available Wednesday), we see soybean oil domestic usage for the month was roughly 1.891 billion pounds, down a minor 1% from last year, reflecting an improvement from the 6% decline in August, but a pullback from the 4% gain posted during the previous 4-month, May-Aug, period. Pending official export data, 2019/20 marketing year total domestic soybean oil usage is pegged at roughly 22.307 billion pounds vs the USDA’s last official estimate of 22.450 billion and down from 2018/19’s 22.874 billion pounds. Recently-released August biodiesel production data showed 745 million pounds of soybean oil was used for biodiesel production in the month vs 775 million pounds in July and 599 million last year. With only official September data remaining, we estimate 2019/20 soybean oil for biodiesel production will be around 7.800 billion pounds vs USDA’s last estimate of 7.850 billion.
USDA reported U.S. soybean meal/hull production in September was 4.009 million tons vs 4.112 million August and 3.800 million tons last year, putting 2019/20 total production at 51.096 million tons vs USDA’s last balance sheet assumption of 51.028 million tons and last year’s 48.814 million tons. USDA reported end September soybean meal stocks were 341k tons, vs their last balance sheet assumption of 400k, implying September domestic soybean meal usage was up roughly 10% from last year (pending official export data) vs unchanged in August and the 2.4% average increase over the previous 4-month May-Aug period. 2019/20 total domestic soybean meal usage is estimated at roughly 37.826 million tons vs the USDA’s last estimate of 37.75 million tons and last year’s 36.212 million tons. We see 2019/20 soybean meal exports at roughly 13.950 million tons vs USDA last at 13.900 million.
In this month’s Grain Crushings report, USDA reported 401 million bushels of corn was used for ethanol production in September, down slightly from 411 million bushels in August, but impressively only minimally less than last year’s September usage of 406 million bushels, despite estimated ethanol production in the month being down nearly 7% from last year. Once again, USDA reflected sorghum used for ethanol production in September was nearly non-existent vs 9 million bushels used in September last year, while the implied ethanol/corn yield in September of roughly 2.86 gallons/bushel was below that of last September’s 2.96 gallons/bushel, indicating more bushels of corn needing to be used order to produce the same amount of ethanol. We will be watching the implied ethanol yields in the coming months closely to see if any pattern develops regarding relative yields to last year as new crop supplies make their way to ethanol plants. In order to reach the USDA’s 2020/21 corn for ethanol usage estimate of 5.050 billion bushels, corn usage during Oct-Aug would need to total 4.649 billion bushels, up 203 million bushels (4.5%) from last year’s 4.446 billion. It will take several months of data into the 2020/21 to better assess expected ethanol/corn yields from this year’s crop and whether any decent level of sorghum usage returns to ethanol production as we fine tune estimated “needed” ethanol production rates to reach the USDA’s corn demand target. Based on the 2019/20 corn marketing year average ethanol/corn yield of 2.89 gallons/bushel and the assumption corn will account for roughly 99% of total feedstocks used for ethanol production in 2020/21, we preliminarily estimate ethanol production will need to run roughly 5.7% above year ago levels throughout Nov-Aug in order to reach the USDA’s annual corn for ethanol usage estimate of 5.050 billion bushels. USDA reported 1.734 million tons of DDGS were produced in September vs 1.805 million tons in August and 1.789 million tons last year September.