Record Fall Exports & Crush Helps Drop December Stocks To 5 Year Lows

Market Analysis

This year’s strong rebound in US soybean output found a record demand from both overseas and domestic buyers during the first quarter of the 2020/21 crop year. The combination of Phrase 1 Chinese ag buying and growing season weather issues across Europe, N. America, Asia, and now S. America have combined to boost the world’s protein demand as the coronavirus prompted the hoarding of foodstuff across the globe. Overall, this caused a historic 17.4% jump in last fall’s US overseas soybean shipments and processing 1.66 billion bu. vs the previous record disappearance in 2016/17.

In exports, 2020’s 1st quarter shipments likely increased 80% over 2019’s level to 1,1 billion bu which is 18.4% larger than the 2016/17 previous record. This year’s sales pace adds to the optimism about overseas demand remaining strong. In the first 15 weeks of this crop year, 1.99 billion bu. of beans have been sold to foreigners. This is 90.5% of the USDA’s current forecast and 150 million bu ahead of the 5-year seasonal average pace to reach the USDA’s 2.2 billion bu. projection for this date in the crop year. At this strong pace, the USDA could raise its US soybean export outlook by 25-35 million bu on their January balance sheet.

Earlier this month, NOPA released its November soybean crush. For the 3rd month in a row, US soy processors total crush is expected to be record 192 million bu. for last month. This brings the 1st quarter US domestic demand to 560 million bu., which is 29 million bu. over 2018/29 previous fall record crush level. After last month’s 15 million S&D increase, no change in this domestic demand is expected in the US January update.

Utilizing these demand levels and a significant jump in last fall’s residual disappearance to 197 million bu because of 2020’s substantial jump of supplies in transit from hefty in barge and rail loadings, this year’s December soybean stocks are expected at 2.805 billion bu. This level will be 13% lower than last year and the lowest 1st quarter stock level in five years.

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Disclaimer: The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of any futures brokerage firm or its ...

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