Ending Stocks Marginally Higher on Lower Crush Demand

This year’s crop may be smaller than originally thought, but reduced crush demand has driven ending stocks in a different direction than the trade expected this month.

For a commodity that has been seeing drastic changes in its supply and disposition estimates of late, the November update brought little new information to the table. The latest monthly supply-demand update from the USDA on Friday pegged 2019-20 US soybean ending stocks at 475 million bu, up 15 million bu from October yet down a whopping 438 million from last year. This small increase likely came as a surprise to many in the industry as the pre-report trade guess for soybean ending stocks was significantly lower at 419 million bushels.

Soybean futures saw some strong prices shortly after the report’s release but were trading 5 cents lower into the close.

The supply side of the equation this month remains largely unchanged. Production is lower by about 1 million bu on fractionally lower yields and unchanged harvest area. While the pre-report trade guesses on production, yield and harvested area were all for slight reductions, these figures were all left virtually unchanged.

Similarly, no changes were made to the demand side save for a 15 million bu reduction in soybean crush estimates.

The U.S season-average soybean price for 2019-20 is forecast at $9.00/bu, unchanged from last month. Soybean meal is also unchanged at $325.00per short ton and soybean oil is forecast at $0.31 per pound, up a penny from last month on reports of sharply higher prices being paid throughout October.

Meanwhile, world soybeans supplies have increased this month to 95.42 million tonnes from 95.21 million a month ago yet remain lower than last year’s levels of 109.66 million.

The 2019-20 Brazil and Argentina soybean production estimates were left unchanged from October at 123 million and 53 million tonnes, respectively.

Source: DePutter Publishing Ltd.

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