-July soybean crush slightly above expectations
-July soybean oil stocks a bit lower than expected
-July corn for ethanol usage confirms USDA annual estimate too high
USDA reported U.S. soybean crush in July was 166.4 million bushels, slightly larger than the average trade estimate of 165.2 million (165.0-165.7 million range of ideas), but still down 9.8% (18.1 million bushels) from last year’s July crush of 184.5 million bushels, the largest monthly decline of the 2020/21 marketing year. U.S.-wide crush was 7.3% larger than NOPA-member crush for the month, the largest percentage deviation between the two in four years and above the 5.9% average difference so far in 2020/21. Marketing year-to-date crush (Sept-July) of 1.972 billion bushels compares to 1.990 billion last year with only August remaining. Last year, crush during the entire December-July period set monthly records in each of the eight months, but pulled back in August. Accordingly, if we assume August crush down 7% from last year vs the 9-10% declines in June and July, 2020/21 total crush would be 2.135 billion bushels vs USDA’s last estimate of 2.155 billion and would be down 30 million bushels from last year’s 2.165 billion. Based on this, we anticipate USDA again lowering their 2020/21 crush estimate in the September 10 WASDE report. USDA reported July soybean oil production was 1.973 billion pounds vs 1.909 billion in June and 2.123 billion pounds last year, with the average soybean oil yield rising to 11.86 pounds/bushel in July from 11.80 in June and compares to 11.51 last year. So far, the 2020/21 average soybean oil yield has been 11.72 pounds/bushel vs 11.45 during the same period last year. End July U.S. soybean oil stocks were reported at 2.070 billion pounds, solidly below the average trade estimate of 2.132 billion pounds (2.109-2.180 billion range of ideas), but little-changed from June’s 2.100 billion and only a bit below last year’s 2.123 billion pounds. Nationwide July soybean oil stocks were 28.1% larger than NOPA-member stocks, returning to near the recent average deviation of 27.7% (March-May) following the anomaly of June stock’s deviation to NOPA surging to an atypical 36.6%. Despite stocks being a bit lower than expected, July domestic soybean oil usage was still implied down more than 6% from last year and followed June domestic usage down 8.6% from last year. 2020/21 marketing year to date implied domestic soybean oil usage of 19.44 billion pounds is up 5.6% from last year vs USDA currently estimating a 6.8% increase for the whole of 2020/21. Moreover, the June and July domestic usage shortfalls relative to last year were easily the largest of the year so far, implying the USDA’s 23.825 billion pound annual estimate is likely too high. USDA reported July soybean meal/hull production was 3.967 million tons vs 3.834 million in June and 4.361 million tons last year. Based on estimated July exports, domestic usage for the month is implied down nearly 9% from last year following April-June usage down 1.4%, with marketing year to date implied domestic usage of 31.32 million tons nearly identical to last year’s 31.52 million tons. The pullback in domestic usage of late is a bit concerning with USDA estimating 2020/21 total domestic usage at 37.650 million tons, nearly unchanged from last year’s 37.723 million, which appears appropriate based on marketing year to date usage, but additional shortfalls in August and September would leave their estimate too high.
In this month’s Grain Crushings report, USDA reported 449.1 million bushels of corn was used for ethanol production in July vs 440.0 million in June and 424.1 million bushels last year July. Accordingly, 2020/21 marketing year to date (Sept-July) usage of 4.612 billion bushels compares to 4.444 billion last year and 4.923 billion bushels during the same period in 2019. Based on the USDA’s 2020/21 marketing year total corn for ethanol usage estimate of 5.075 billion bushels, August usage would need to be 463 million bushels, nearly 13% above last year’s 411 million, which clearly will not be the case as ethanol production ran only around 2.5% above year ago levels on average during the month. Accordingly, if August corn for ethanol usage proves 2-3% above last year, 2020/21 total usage would be implied around 5.030-5.035 billion bushels, 40+ million bushels less than the USDA’s current estimate, with this year’s higher than usual corn inclusion of total feedstocks potentially pushing that a bit higher. We’re currently using 5.040 billion bushels in our balance sheet. USDA reported 0.7 million bushels of sorghum was used for ethanol production in July vs 0.6 million last year, putting corn’s share of total feedstock usage at 99.8%. Based on estimated monthly ethanol production, the ethanol/corn yield in July held mostly steady at 2.924 gallons/bushel vs 2.925 in June and the 2.920 average during March-June. The 2020/21 to date average ethanol yield has been 2.91 gallons/bushel vs 2.89 during the same period last year. USDA reported 1.970 million tons of DDGS were produced in July vs 1.925 million tons in June and 1.865 million last year, bringing corn marketing year to date production to 19.72 million tons vs 18.62 million last year.
