Tighter, tighter, and tighter still.
That pretty much sums up the story for US soybeans, as the latest monthly supply-demand update from the USDA on Tuesday further reduced projected ending stocks by 35 million bu from December to 140 million bu. If accurate, it will be the lowest US soybean ending stocks since 2013-14, when stockpiles dwindled to just 92 million bu and the stocks-to-use ratio to 2.6%.
With ending stocks at 140 million bu, the stocks-to-use ratio for the current marketing year currently sits at around 3%.
Going into today’s report, the average pre-report trade guess had US soybean ending stocks at 139 million bu. However, the market was still sharply higher, with futures up more than 45 cents in trading after the report’s release at the noon hour.
This month’s drop in ending stocks can be attributed to both heavier demand and a smaller 2020 US crop. Production is now estimated at 4.135 billion bu, down 35 million from last month (but still up from 3.952 billion in 2019) as this year’s average yield was reduced to 50.2 bu/acre from 50.7 bu. That reduction was more than enough to offset a slight increase in harvested area.
As for demand, the soybean crush forecast was raised 5 million bu from December to 2.2 billion, ‘reflecting improved prospects for soybean meal exports with a lower export forecast for Argentina,’ the USDA said. The soybean export forecast is bumped higher as well, rising 30 million bu from last month to a record 2.23 billion bu.
In other supply-demand changes, the USDA raised 2020-21 beginning stocks by 2 million bu to 525 million, while projected imports were increased to 35 million from 15 million.
In terms of South American soybean production, the USDA hacked forecasted Argentina production by 2 million tonnes from last month to 48 million but left its Brazil estimate unchanged at 133 million. The average pre-report estimates had Argentina’s crop at 48.4 million tonnes and Brazil’s at 131.4 million. World soybean ending stocks for 2020-21 are estimated at 84.31 million tonnes this month, down from 85.64 million in December and 95.39 million in 2019-20. The average pre-report trade guess for world ending stocks was 82.66 million.
The US season average soybean price for 2020-21 is projected at $11.15/bu this month, up 60 cents as cash prices in central Illinois reach 6-year highs. The soybean meal price is projected at $390/short ton, up $20. The soybean oil price is forecast at 38.5 cents/lb, up 2.5 cents.
Source: DePutter Publishing Ltd.
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