More Breathing Room for Tight Soybean Supplies

The balance sheets for old- and new-crop US soybeans now have a bit more breathing room.

In its regular monthly supply-demand update on Thursday, the USDA lowered its 2020-21 soybean crush estimate by 15 million bu from May to 2.175 billion bu. With no other changes on the supply or demand side, that reduction went straight to the bottom line of the old-crop balance sheet, resulting in an identical-sized 15 million bu increase in ending stocks to 135 million (still down sharply from 525 million the previous year).

Meanwhile, with no other supply or demand changes on the new-crop side, the smaller carryin from the 2020-21 marketing went straight to the bottom line as well, increasing the 2021-22 soybean ending stocks estimate to 155 million from 140 million in May.

The increases in the old- and new-crop ending stocks estimates were larger than expected, with the average pre-report trade guess putting 2020-21 ending stocks up just 2 million bu from last month, while new-crop stocks were seen rising only 6 million. Soybean futures were trading between 8 and 13 cents lower after the report’s release.

According to the USDA, this month’s reduction in the old-crop crush estimate is based on a lower forecast for soybean meal domestic disappearance and higher soybean meal imports.

Global 2021-22 soybean ending stocks are raised 1.5 million tonnes this month to 92.6 million, driven by higher beginning stocks for the US and Brazil.

On the old-crop side, Brazil’s 2020-21 soybean production is raised 1 million tonnes from last month to 137 million, mainly on higher yields for Mato Grosso do Sul. Old-crop world soybean ending stocks are estimated at 88 million tonnes this month, versus 86.55 million in May.

Source: DePutter Publishing Ltd.

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