Fundamentally Speaking

By Joel Karlin
Contributing Analyst

Soybean oil has rallied sharply over the past two weeks spurred by short-covering, trepidation about this year’s South American production prospects, a continued recovery in Malaysian palm oil prices from recent three year lows, and very strong export sales so far this marketing year.

Keying on this final point, the 2012-13 U.S. soybean oil marketing year began October 1^st and a mere six weeks into it total US. soybean oil sales are 990 million pounds as of mid-November.

This is 82.5% of the 1.20 billion bushel export projection the USDA gave earlier this month in the November WASDE report.

This research piece shows total U.S. soybean oil sales in million pounds as of mid-November and graphs those sales as a percent of the November WASDE soybean oil export projection.

Finally, the difference between the November WASDE export projection and the final year export figure is calculated and also charted.

The current year 990 million pound number for mid-November is the third highest ever for this time of year trailing the 2010-11 figure of 1.570 billion and 1.510 billion the year before that.

As a percent of the November WASDE estimate, this year’s figure has never been higher at 82.5%.

The only other year close is 2010-11 when 58.2% of the November WASDE estimate was already on the books.

The question we have is whether an aggressive early seasons ales pace will prompt the USDA to hike its export projection.

This year that seems a given with some saying that total U.S. soybean oil exports this year will be over 1.80 billion pounds, at least 50% more than current projections.

In the 2010-11 season we had cited, another year of strong early season exports final soybean oil sales were 533 million pounds more than estimated in the November WASDE.

The prior year when exports as of mid-November were 46.5% of the projected total, soybean oil exports were only 109 million pounds above the Nov WASDE projection.

Interestingly, the largest upward adjustment between the Nov WASDE and the final year exports came in the 2007-08 season with final sales 1.361 billion pounds more than the November estimate, yet sales the middle of that month were 34.2% of that WASDE figure.

(KA)

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