-June U.S. soybean crush as expected
-End June U.S. soybean oil stocks sharply higher than expected-June corn for ethanol usage supports USDA’s annual demand estimate
USDA reported U.S. soybean crush in June was 161.7 million bushels, in line with average market expectations of 162.1 million (161.4-163.1 million range of ideas), but down solidly from 173.5 million in May and, more importantly, down 8.8% (15.6 million bushels) from last year’s 177.3 million bushels. June data put marketing year-to-date (Aug-June) crush at 1.806 billion bushels, essentially unchanged from last year’s 1.805 billion, while total crush over the last five months (Feb-Jun) was exactly 50 million bushels (5.5%) less than during the same period last year. The USDA’s 2.170 billion bushel 2020/21 total crush estimate of 2.170 billion bushels is clearly too high as it would require July-August crush of 364 million bushels, 1.4% higher than last year’s 359 million, which clearly appear extremely unlikely given the notable year-over-year reductions seen in recent months. Last year’s July crush was a record 184.5 million bushels, while August crush was a bit off the record but still historically high at 174.7 million bushels. Assuming July crush 7% below last year’s record and August crush down 5% from last year would imply 20/21 total crush of 2.144 billion bushels, 26 million below the USDA’s current estimate. With exports running mostly in line with the USDA’s current projection, it appears 2020/21 U.S. soybean ending stocks are likely to prove at least 20 million bushels above the USDA’s current 135 million bushel estimate. USDA reported U.S. soybean oil production in June was 1.909 billion pounds vs 2.043 billion in May and 2.035 billion pounds last year, which was 6.2% larger than NOPA-member production for the month, matching the largest difference between nationwide and NOPA production of the last 26 months. The nationwide average soybean oil yield in June was 11.80 pounds/bushel vs 11.78 in May and 11.48 in June last year. The largest surprise of this month’s data came in end June soybean oil stocks of 2.100 billion pounds, which were sharply above average market expectations of 1.994 billion pounds and well above the range of ideas of 1.970-2.015 billion pounds. June SBO stocks were down only 47 million pounds from May’s 2.147 billion and were a substantial 36.6% larger than NOPA-member stocks (27.7% average difference previous 3 months), the largest difference in 23 months, and compared to 2.271 billion pounds last year June. Based on estimated exports, June domestic soybean oil usage was implied down nearly 8% from last year after Sept-May domestic usage ran at an average 9.7% above year ago levels. USDA reported June soybean meal/hull production was 3.834 million tons vs 4.123 million in May and 4.167 million tons last year June, with stocks dropping back to a more typical 439k tons from the atypically large 642k in May. Based on estimated exports, June domestic soybean meal usage was implied up 7% from last year after April-May was down 4% and marketing year-to-date domestic usage was running unchanged from last year.
USDA reported 439.9 million bushels of corn was used for ethanol production in June, down from 448.9 million in May, and compared to 379.2 million bushels in June last year and 456.4 million in June 2019. This was a bit lower than we anticipated as there was an uptick in sorghum being used for ethanol production in June, as well as an apparent uptick in ethanol/corn yields to around 2.97 gallons/bushel from 2.92 in May, resulting in more ethanol being produced with less bushels of corn. Sept-June marketing year-to-date corn for ethanol usage of 4.162 billion bushels is up 3.5% from last year’s 4.020 billion and will require July-August usage of 888 million bushels in order to reach the USDA’s 5.050 billion bushel annual estimate, 6.1% higher than last year’s 837 million and 2.0% less than 2019’s 905 million. Over the last three weeks, ethanol production ran at an average decline to 2019 of 1.7% and was 5.8% above last year’s production last week as year ago production rates finally began to stabilize after the recovery from the COVID shock. The sharp rise in ethanol stocks in recent weeks has begun to put a bit of pressure on production rates but, overall, today’s data and recent-week ethanol production levels have supported the USDA’s annual demand estimate. USDA reported 1.930 million tons of DDGS were produced in June vs 1.943 million in May and 1.664 million tons last year, putting corn marketing year-to-date production at 17.755 million tons vs 16.750 million tons last year.
