In its December round of Supply and Demand reports USDA estimated US soybean 2020-2021 ending stocks at 175 mb, down 15 mb from its November estimate. The change was due to a like increase in demand, all of it in crush as USDA upped its estimate to 2.195 bb from last month’s 2.180 bb. The combination of a smaller ending stocks number and larger demand estimate of 4.354 bb led to an ending stocks-to-use calculation of 3.9% (red column), far below the “final” 2019-2020 calculation of 14.4% (green column) but still well above my 1% calculation (blue column) at the end of November based on analysis of the cmdty National Soybean Price Index (weighted national average cash price).
Globally, the WASDE ending stocks estimate was dropped by almost 1 mmt due to a like decrease in Argentina’s production. It’s interesting to note Brazil’s production was left unchanged at 133 mmt, as compared to last year’s production estimate of 126 mmt, a move I’m sure has already sparked a great deal of debate among analysts.
Recall from my December 1 Supply and Demand update, the 2020-2021 cost of carry table was showing a stronger inverse in the May-July futures spread from the previous month, indicating tighter long-term fundamentals. USDA’s domestic and global estimates would seem to be in line with this analysis.