The U.S. Soybean Export Council (USSEC) hosted its exclusive World Agricultural Supply and Demand (WASDE) briefing on August 12. The WASDE is a monthly report published by the United States Department of Agriculture (USDA); as noted by Jim Sutter, USSEC CEO, it is “used by agricultural commodity traders, farmers, processors, retailers, consumers and many others to take action and position themselves or make future plans based on the current global supply and demand situation.”
Mac Marshall, vice president for market intelligence for the United Soybean Board (USB) and USSEC, outlined the report, calling it “much-anticipated,” as it is the “first WASDE report of the season that includes survey-based yield estimates.”
“As we approach the end of the marketing year and the seasonal lull in soybean exports out of the U.S., the export forecast was revised down fractionally by 10 million bushels (about 0.25 million metric tons (MMT)) to 2.260 billion bushels (or 61.5 MMT),” reported Marshall. He noted this would still be a record even with the downward revision. Domestic crush was revised down by 15 million bushels – or 0.4 million metric tonnes (MMT) – to 2.155 billion bushels, about 52% of the 2020 US crop.
“As the export sales report released a couple hours before the WASDE report, accumulated exports through August 5 are 59.4 MMT with another 2.57 MMT in open sales, bringing total commitments to just over 62 MMT for the 20/21 marketing year,” Marshall said. This data is not yet official, but the latest official Census data shows that accumulated exports through the end of June were 59.4 MMT, closing in on a record set in MY16/17.
With the reductions in crush and exports, ending stocks were revised up by 25 million bushels (0.68 MMT) to 160 million bushels (4.35 MMT). The marketing year average price was revised down by 15 cents per bushel to $10.90/bu. With lower crush, production of both soybean meal and oil was revised down.
Marshall turned to notes from major international soy producers:
- Chinese imports of whole soybeans were revised down by 1 MMT for MY 20/21 and crush was taken down by 2 MMT. On balance this led to a 1 MMT upward revision to projected ending stocks. China’s production and consumption of both soymeal and soy oil were revised down, 1.6 MMT and 0.4 MMT respectively.
- Argentine and Brazilian production were both revised down by half a million metric tonnes.
- Nigerian crush was revised up by 233,000 MT – a 39% increase from the prior estimate.
As Marshall turned to the MY 21/22 crop he noted, “this is where the action is for the August release,” as the data integrates survey-based yield estimates into overall balance sheets. The USDA took down the projected US soybean yield from 50.8 bushels per acre to 50.0 bushels per acre – about 3.36 metric tonnes per hectare.
While making a larger cut than expected to 50 bushels per acre, August U.S. soy yields reported by the USDA were within trade expectations. On the lower end, 4.339 billion bushels was below the average but still within the consensus range.
When considering yield by state, Marshall noted the weather’s negative impact on yields from the Northern Plains region and new records from large production states.
With the downward revision to production being in part counterweighted by higher carry-in from the old crop, projected carryout for the new crop was unchanged at 155 million bushels.
Also contributing to that balance were downward revisions to crush and exports – both by 20 million bushels. With lower crush, production for both meal and oil were revised down, as were exports of the co-products. Prices for soybean oil and whole soybeans were unchanged from July while soymeal prices were revised down by $10 per short ton.
The uptick in old crop ending stocks was generally expected, though the WASDE figure of 160 million bushels was at the upper end of the range of trade expectations. For new crop, ending stocks remaining at 155 million bushels was within the range of expectations.
MARKET ANALYST INSIGHTS
Arlan Suderman, Chief Commodities Economist from StoneX Group Inc., joined the report to provide his expert analysis on the August report and set up rest of the year’s expectations. Suderman’s initial reaction noted that yields have tended to be smaller looking into harvest based on the August WASDE report.
Marshall and Suderman covered the concern of the dry heat in the Northern Plains, which could strain supplies to the Pacific Northwest (PNW) region of the U.S. However, a weather pattern shift is expected soon that will help with late crop development.
Marshall and Suderman agreed that getting every bushel possible is critical, specifically in the U.S. Northern Plains, as demand, especially from China, is not expected to curb even while ocean freight rates are high. “My view is that our order books [for the next year] still look strong. We’ve got over 4 MMT booked to China alone as of this morning,” Marshall said.
Suderman exerted his optimism for the overall demand for whole soybeans and soybean meal in the upcoming marketing year, especially if the price of wheat and corn in China reverts to typical levels.
Marshall and Suderman closed by discussing soybean oil and its role in the already tight vegetable oil market due to demand of soybeans and other oilseeds for bio and regenerative fuels.