Grains –
Several data releases from government agencies yesterday worth quickly reviewing. NASS issued the Fats & Oils and Grain Crushings reports yesterday afternoon. Looking at the Fats & Oils report first, the Oct soybean crush was reported at roughly 175.9 mil bu, which is right inline with what we were expecting following the NOPA release earlier. The F&O crush has consistently been around 6.5-7.0% higher than the NOPA release over the past several months. We’re only two months in, but MYTD crush is about 10 mil bu higher than last year.
Looking at the products, meal stocks were up from last month as you’d expect but still down from last year. Implied domestic meal consumption posted a pretty solid number, coming in roughly 3% higher YOY. WASDE’s marketing year domestic consumption projection is up 3% from last year, so for now they appear to be on track. It looks like last month’s soyoil stocks, and thus 15/16 ending stocks, were revised slightly lower. This could mean a change on the next WASDE. October stocks were up from last month but still down YOY.
The Grain Crushings report showed the corn for ethanol grind at 455 mil bu compared to 440 mil bu last year. MYTD ethanol use is up roughly 24 mil bu only two months into the year. The sorghum grind increased from last month to roughly 8 mil bu but sorghum use is running slightly behind the pace seen last year. This shouldn’t come as a surprise as WASDE has FSI use down YOY. What is interesting in this report is that the combined grind figures for corn and sorghum would actually imply bigger ethanol production than we saw in the weekly data from EIA. I normally assume a “textbook” 2.85 conversion factor for corn and 2.75 for sorghum, and this would have produced roughly 31.5 mil barrels of ethanol compared to the weekly data showing roughly 30.8 mil. It seems the situation has flipped from earlier last year when conversions were running exceptionally high. Now conversions seem to be running a bit light relative to our assumptions. Usually this all evens out over time, but it’s something we’ll keep an eye on.
The EIA also provided us with the monthly biodiesel production update. Biodiesel production was down slightly from last month, as we had expected based on the EPA’s RIN figures. Soyoil use in biodiesel production totaled 537 mil lbs. This completes the 15/16 marketing year data for biodiesel consumption, and the total soyoil inputs in my data add up to 5,654 mil lbs which is a little below the WASDE assumption. This combined with the above mentioned stocks revision will make for some interesting changes on the WASDE balance sheet. Soyoil comprised roughly 49% of total biodiesel production inputs.
Implied domestic consumption of biodiesel was down slightly in the last month, but look for this to continue to trend higher into the end of the calendar year as blenders seek to take as much advantage of the expiring tax credit as possible. It is also worth noting that imports continue to be a big part of matching the biodiesel mandate. I continue to believe the expiration of the tax credit will not change this.
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