USDA’s Fats & Oils Report: Still Crushing Soybeans
On Monday, the USDA released its monthly Grains & Crushings and the Fats & Oils reports. Both reports are for January’s activity.
Soybeans used for crush was 5.66 MBU, + 2% higher from December 2019 and January 2019.
Total soybean consumption was 120,00 higher from December 2019 and 3% higher than January 2019.
Soybean meal production was 4.12 million tonnes (MT).
Total corn used for fuel alcohol and other uses was 519 MBU in January 2020.
Total corn consumption was - 2% from December 2019 but +5% from January 2019
Corn for fuel alcohol, was 469 MBU -2% from December 2019 but +6% from January 2019.
FBN’s Take On What It Means: The USDA’s Fat & Oils report continues to support NOPA’s monthly crush data and shows solid use rates for soybeans. The USDA’s Grains & Crushings report shows a slight decline in corn processed for ethanol. We believe that the USDA’s soybean crush pace continues to verify NOPA’s monthly member surveys and is showing the potential for record crush demand.
US Corn and Soybean Insurance Prices for 2020 Hit 4-Year Low
With February trading complete, the U.S. government’s insurance guarantees to farmers for the 2020 corn, soybean, and spring wheat harvests have reached four-year lows.
The average price of December corn during February was $3.88 per bushel, 12 cents below 2019 and slightly above the February 2016 average of $3.86.
November soybeans averaged $9.17 per bushel, down 37 cents on the year but above 2016's price of $8.85.
While those prices do not directly determine what US farmers will plant they reflect a level of assumed risk to plant each crop in the upcoming growing season as they are used by the USDA Risk Management Agency (RMA) in its revenue protection program.
The February price ratio of soybeans to corn was 2.36, down from 2.39 last year, and the lowest since 2.29 in 2016.
Last month the USDA estimated US corn acres at 94 million acres (MA).
The USDA estimated soybean acres at 85 MA.
This would be the largest planted corn and soybean area since 2016.
FBN’s Take On What It Means: We believe that while the February corn and soybean ratio does not directly influence the individual farmer’s planting behavior, it has been leaning more toward corn than recent years. We view this compressed ratio as having the ability to increase corn acres in the fringe states.
The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)