Fundamentally Speaking

Like most of the USDA reports issued on January 12, the new 2021/22 balance sheets for U.S. soybeans, soybean oil and soybean meal lacked any real fanfare with most of the figures essentially unchanged.

One item in the USDA's January 2022 Oil Crops outlook that caught our eye was apparently due to the hot Midwest summer: soybean oil yields have been enhanced while the opposite has been observed in soybean meal yields.

As a result, the 2021/22 extraction rate for soybean oil was raised by 0.08 pounds of oil per bushel to 11.83 and lowered by 0.2 pounds of soybean meal per bushel to 47.0.

Consequently, the production estimate for soybean oil is raised by 175 million pounds to 25.91 billion and lowered for soybean meal by 200,000 short tons to 51.5 million.

Interesting that these output changes flowed directly to trade as WASDE report noted soybean oil export forecast is now that exact 175 million pounds higher at 1.43 million pounds while the soybean meal export forecast is revised down by that same 200,000 to 14 million short tons.

Another reason besides less production and the $45 per ton hike in the average price to lower the projected soybean meal export estimate is a lagging sales pace so far this marketing year.

This graphic shows U.S. soybean meal exports and shipments as of the first week in January in 1000 metric tons on the left-hand axis and on the right-hand axis are those figures as a percent of the USDA's January WASDE export projection going back to the 2000/01 season having converted the WASDE short ton figure back to metric tons.

The current cumulative sales at 6.88 million metric tons (mmt) is just 45.9% of the USDA's Jan 2022 projection of 13.692 mmt (which is also 14.0 million short tons) and other than last year is the lowest amount of soybean meal sold as of the first week of January as a percent of that month's WASDE projection since the 2009/10 marketing year.

A bright spot is that though the sales pace appears to be lagging, the soybean meal is getting exported as total shipments as of the first week of this month total 3.465 mmt, the most ever for the first quarter of the marketing year (Oct-Sep) and stands at 25.3% of the Jan 2022 WASDE projection, the highest in five years.

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