The U.S. Department of Agriculture (USDA) issued its quarterly update of U.S. grain and oilseed inventories at the end of March. These data were mostly overshadowed by continued discussions of the ongoing global COVID-19 pandemic, but the figures provide interesting insights as to the latest inventories held both on-farm and in commercial as well as potential implications for the future of the agency’s balance sheet update.
For soybeans, total supplies totaling 61.324 million tonnes were down 17% from record levels last year but came in above the average of published trade expectations for 60.991 million tonnes. Looking at history going back to the 2000/01 marketing year, the market has experienced much larger supplies as of March 1 at above 50.0 million tonnes in each of the past three marketing years. This represents a much more comfortable U.S. soybean supply scenario ahead of new-crop South American supplies than had been the case in previous years.
Following the quarterly report, the trade received February official trade data and industry crushings that helped to provide the final supply and demand components for the second quarter of the 2019/20 marketing year. For the December-February quarter, cumulative U.S. crushings totaled 14.746 million tonnes and exports were 13.322 million. This brings total explained disappearance to 28.068 million tonnes compared with 27.169 million last year but is short of the previous five-year average of 30.446 million tonnes. In addition to the known usage components, there is an implied residual calculation which reflects any errors in the reporting. It is not uncommon for this unexplained demand to be negative for the second quarter as indicated by the green bars in recent years below the x-axis in the accompanying graph.
When looking at combined residual usage for the first half of the 2019/20 marketing year, the total of just 0.605 million tonnes is by far the lowest on record below 2.45 million tonnes the same period last year. USDA’s stocks figures are subject to revision in future reports meaning that stocks could be revised lower to increase the residual disappearance for the second quarter. If there is not a revision, this low residual demand figure suggests that an upward revision to the 2019 U.S. soybean crop may be needed later this fall. Regardless of the following changes, this latest report underscores the ample supplies of soybeans held by U.S. farmers and commercial interests and should reassure foreign buyers of plentiful supplies to help meet their needs.