The Census soybean crush data for September has been released with a record volume of soybeans being used. For the month US crushers consumed 171.03 million bu of soybeans, the most ever for the month. This total was in line with most pre-report estimates but was still enough to give the soy complex support. 

One factor that was noted in the monthly crush data was lower yields on meal and oil. Monthly yields averaged 11.5 pounds of oil and 43.9 lbs. of meal per bushel. These are just slightly under what we have been seeing but brings into question the overall quality of this year’s soybean crop. They also generate ideas that crush could be higher this year to produce enough products, further reducing ending stocks. 

According to Census data, the United States produced 28.42 million barrels of ethanol in the month of August. This was a 12-million-barrel reduction from July and 11% less than a year ago. Ethanol exports during the month totaled 2.4 million barrels which was a 4-month high. Ethanol stocks at the end of August totaled 20.14 million barrels. For biodiesel, the United States produced 163 million gallons for the month. 

While export demand on corn has been at a record pace this year there are questions on how long the elevated sales will last. Most corn sales to this point have been to China as that country rebuilds its reserves. Other buyers have been hesitant to extend coverage at this time as they want to see what other countries have for production potential and how the futures market reacts. Many buyers feel that given global corn production estimates and current values they will be able to lock in needs at more affordable levels in future months.

Once again trade is starting to try and predict Chinese commodity demand. China recently released its import projections for the 2020/21 marketing year with totals of 7 million metric tons on corn and 95.1 mmt on soybeans. These numbers are being heavily debated. 

On corn the question is coming from the fact China already has more purchases on the books than the projected total. Given this confusion, China is either going to import more than they are showing, or cancellations may take place. There is speculation that cancellations may be a possibility and that recent purchases have been made to satisfy the Phase 1 agreement. This is possible, but the fact China needs corn to satisfy elevated domestic usage makes it unlikely. 

China’s soybean import forecast is also being questioned as the total is 2 mmt less than this year’s imports. If China was in fact buying soybeans for reserves rather than immediate needs, the reduction is more believable. One worry on Chinese demand is why the US is not seeing any purchases beyond the current marketing year while Brazil is. It is reported that Brazil is making record soybean sales for its next crop with China the primary buyer. This gives the idea that the US is only going to be used to fill gaps in the Brazilian supply. 

One benefit the United States is seeing in the market is its value compared to other feed grains, mainly wheat. The spread between corn and wheat has widened out to nearly $2 a bushel. Once the spread gets this wide, livestock feeders tend to shift away from wheat as a feed ingredient and use more corn. That said, buyers know there is no urgency in covering either commodity at this time and will wait to do so. 

After a rise in imports this year, China has released its pork and beef import estimates for the near future. Historically China has only imported 1% of its pork needs, but the outbreak of African Swine Fever pushed this total to 10% of needs. This came at the same time China’s population was increasing pork in its diet. China now hopes to keep pork imports at just 5% of needs. China also hopes to raise 85% of its beef usage. China has also stated it will make purchases from a variety of sources to spread its risk. 

The October Fall Harvest Option crop insurance values have been released. For soybeans this value is $10.55 per bushel, the highest fall value since 2013. On corn the fall option value is $3.99 per bushel. This is also the highest since 2013, and for the first time since 2012 the fall value is above the spring value. 

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