USDA Reports Lower Soybean Stocks

December 12th, 2011


Category: Commentary

By Stephen S. Nicholson

In the WASDE report released today by the USDA, there were two surprises: lower soybean stocks than expected and all-wheat stocks were above pre-report expectations.

The USDA reported lower U.S. wheat exports at 50 mln. Bu., which was greater than anticipated. In addition:

  • U.S. exports are now nearly 30% below year ago levels and will be lowest since 2006/07 crop year and second lowest in 25 years.
  • To add to the bearish tone in wheat, USDA raised world wheat stocks 5.9 MMT from last month to 208.5 MMT. Foreign buyers continue to bypass U.S. wheat due to cheaper priced supplies from other countries.
  • Cold snap in U.S. Plains HRW growing areas is not expected to cause any significant harm to this year’s crop.

Price Outlook: March Kansas City wheat futures have put in a double bottom this morning in the $6.50 area, which be solid support going forward.

2011/12 soybean exports were lowered 25 mln bu. to 1.3 bln bu., also soybean crush was lowered by 10 mln bu.—this accounts for a 35 mln bu. increase in ending stocks. In addition:

  • The surprise came on the soybean oil balance sheet—production was increased 100 mln lbs. despite a decrease in crush, USDA is expecting a higher oil yield.
  • USDA also cut 2011/12 soybean oil exports by 100 mln lbs. to 1.4 bln lbs.
  • This resulted in a 200 mln lb. increase in 2011/12 soybean oil ending stocks to 2.280 bln lbs.

Price Outlook: Soybean oil futures are now trading in a wider trading–$0.48-$0.53—there is solid support at $0.48 on a weekly chart As for sugar, the USDA released updated domestic balance sheets this morning:


The USDA’s updated balance sheets reported:

  • USDA made some minor adjustments to the 2010 balance sheet which resulted in lower ending stocks and therefore, lower 2011/12 beginning stocks.
  • USDA made no other changes to the 2011/12 U.S. sugar balance sheet.
  • As a result, 2011/12 ending stocks decreased 15,000 STRV to 1.198 mln STRV and the stocks-to-use rate went to 10.3% from 10.4% last month.

Price Outlook: Domestic prices are expected to remain firm.

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