-August soybean crush slightly lower than expected
-August soybean oil stocks modestly lower than expected-August corn for ethanol usage supports USDA annual estimate
USDA reported U.S. soybean crush in August was 174.7 million bushels, slightly below wire service-reported average expectations of 175.7 million bushels (175.0-176.8 mil range of ideas) and compares to 184.5 million bushels in July and 177.3 million bushels last year. With the 2019/20 marketing year officially coming to a close, total crush of 2.164 billion bushels was slightly below the USDA’s latest estimate of 2.170 billion bushels, which will be reduced in the October 9 WASDE report, accordingly.
U.S. soybean oil production in August was 2.013 billion pounds vs 2.123 billion in July and 2.048 billion pounds last year, with the average soybean oil yield holding steady at 11.52 pounds/bushel vs 11.51 in July, and little-changed from last year’s August yield of 11.54 pounds/bushel. With one month remaining in the 2019/20 marketing year, cumulative soybean oil production sits at 22.944 billion pounds, leaving September production needing to be roughly 2.000 billion pounds in order to reach the USDA’s annual estimate. Last year’s September production was 1.901 billion pounds based on crush of 162.3 million bushels, which was a notable 15 million bushel decline from August. If crush hold fairly steady for September, 2019/20 soybean oil production should end up near the USDA’s current projection. U.S. soybean meal production in August was 4.112 million tons vs 4.361 million in July and 4.151 million last year, putting marketing year-to-date production at 47.1 million tons, leaving September production needing to be roughly 4.00 million tons in order to reach the USDA’s 51.098 million ton estimate. Last year’s September soybean meal production was 3.80 million tons.
USDA reported end August U.S. soybean oil stocks were 1.958 billion pounds, modestly below the average estimate of 1.994 billion (1.950-2.020 billion range), and down from 2.124 billion pounds in July, but still above last year’s 1.806 billion. U.S.-wide soybean oil stocks for August were 29.0% above NOPA-member stocks vs the previous three months’ average of 29.7%. As seen in the chart below, soybean oil stocks remain right in line with recent years’ levels. Based on estimated exports, August soybean oil domestic usage was down roughly 4.5% from last year after June and July domestic was up 10%+ from last year. Marketing year-to-date domestic usage is down 2.2% from last year, with one month remaining, vs USDA estimating 2019/20 domestic usage down 1.9% for the year. Implied August soybean meal domestic usage was up nearly 2% from last year after July was down 3% and June up 13%, with marketing year-to-date domestic usage up 4.4% from last year vs USDA projecting a 4.7% increase for the year.
USDA reported 411.1 million bushels of corn was used for ethanol production in August vs 424.1 million in July and 454.6 million bushels last year. With August being the last month of the marketing year, 2019/20 total corn for ethanol usage ended up at 4.853 billion bushels vs the USDA’s last balance sheet reflection of 4.855 billion. Fourth quarter usage of 1.214 billion bushels was down 148 million bushels from last year’s 1.362 billion. USDA did not provide data for the amount of sorghum used for ethanol in the month of August, indicating it was too small to prevent disclosing data for individual operations (i.e. less than 1.5 million bushels). The ethanol/corn yield in August was around 2.91 gallons/bushel vs the 2.87 average over the previous three months. We will be watching yields closely in the coming months to try to get some feel for what to expect from the 2020/21 crop, looking for if there is a noticeable change in yields from October forward. The 2019/20 corn marketing year average ethanol/corn yield appears set to be roughly 2.89 gallons/bushel, essentially unchanged from 2018/19 and 2.86 in 2017/18. Another factor to watch in the months ahead is whether or not sorghum returns to the ethanol production mix or not as the Sept-Mar period last year saw 61 million bushels of sorghum used for ethanol production. If not, it will provide a boost to corn demand, accordingly.