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 The USDA provides an estimate of seed and residual use of
soybeans for the marketing year, but does not estimate seed and
residual use on a quarterly basis. “Historically, those
quarterly estimates were provided based on estimates of total
domestic disappearance of soybeans and the Census Bureau
estimates of the size of the domestic crush during the quarter,”
Good said.
Monthly Census Bureau crush estimates were discontinued in July
2011. Quarterly estimates of seed and residual use can now be
derived based on the monthly estimates of the domestic crush
provided by the National Oilseed Processors Association (NOPA).
“Using NOPA estimates of crush, adjusted to reflect that the
NOPA estimate is thought to be for about 95 percent of the
industry, seed and residual use of soybeans during the first
quarter of the 2014-215 marketing year is estimated at 281
million bushels,” Good said. “That estimate is 51 million
bushels larger than the previous record use a year earlier and
100 million bushels larger than use during the first quarter of
the 2012-13 marketing year. Some explained part of the large
residual use with the observation that more soybeans were in
transport on Dec. 1, 2014, than in previous years. Export
inspections, for example, were about 20 million bushels larger
during the first week of December 2014 than in the same week the
previous year. That is the explanation that was apparently
favored by the market, as March 2015 soybean futures closed 36
cents lower on the day the estimate was released.”
Good said another possible explanation for the large residual
use of soybeans during the first quarter of the marketing year
is that the 2014 crop was overestimated. This argument might be
supported by higher-than-expected soybean prices this year given
the estimated size of the surplus projected to be generated by
the large 2014 crop. In addition, basis levels have been
generally strong for most of the year.
The USDA’s estimate of March 1, 2015, soybean stocks, to be
released on March 31, may provide some insight into the debate.
Expectations for the magnitude of March 1 stocks are based on
the estimate of Dec. 1 stocks, imports during the quarter, and
estimates of soybean consumption during the quarter. With Dec. 1
stocks at 2.524 billion bushels and quarterly imports of 10
million bushels, supplies for the quarter would have totaled
2.534 billion bushels. Based on monthly NOPA estimates, the
domestic crush during the second quarter of the 2014-15
marketing year was 2.4 percent larger than the crush during the
same quarter in the previous year.
“The total domestic crush should have been near 498 million
bushels,” Good said.
Census Bureau estimates of soybean exports are available for
December 2014 and January 2015, but have not yet been released
for February 2015. “The Census estimate of exports for the two
months was 8 million bushels less than the USDA estimate of
export inspections during December 2014 and January 2015,” Good
said. “If that margin persisted through February, quarterly
exports should have totaled about 715 million bushels.
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“If the size of the 2014 soybean crop has been accurately estimated,
the March 1 stocks estimate should imply a large negative seed and
residual use during the second quarter of the 2014-15 marketing
year,” Good continued. “That was the case in previous years of very
large, implied residual use during the first quarter of the
marketing year. Seed and residual use during the second quarter of
the marketing year, for example, was estimated at -38 million
bushels last year, -22 million bushels in 2012-13, and -42 million
bushels in 2009-10. A reasonable expectation this year might be near
-90 million bushels. A March 1 stocks estimate near 1.41 billion
bushels would be consistent with the estimated size of the 2014 crop
and known use of soybeans through February.”
Good said if the USDA March 1 stocks estimate deviates substantially
from the calculated value, the debate about the size of the 2014
crop may be renewed. Such a debate, however, would not be resolved
for another six months.
“The USDA’s estimate of the crop size is frequently revised, but not
until the release of the Sept. 1 stocks estimate, which will be on
Sept. 30 this year,” Good said. “Historically, implied seed and
residual use of soybeans during the first half of the marketing year
has not been a good predictor of the size or direction of any
subsequent change in the estimated size of the crop.
Trade expectations for the USDA March 1 estimate of soybean stocks
will be reported this week.
“If history is any indicator, expectations will be in a wide range,”
Good said. “In addition, the experience following the release of the
Dec. 1 stocks estimate suggests that the price reaction to the USDA
estimate is difficult to anticipate. As concluded for corn last
week, unless the March 1 soybean stocks estimate deviates
substantially from the range of possibilities, expectations about
the magnitude of year-ending stocks will not likely be altered. The
market will likely focus instead on the estimate of soybean planting
intentions.”
[Debra Levy Larson, University of
Illinois College of ACES]
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