From USDA’s quarterly grain stocks report, dated Sept. 30, 2020: “Old crop soybeans stored in all positions on Sept. 1, 2020 totaled 523 million bushels, down 42% from Sept. 1, 2019.”
From the WASDE report dated Feb. 9, 2021: “With crush unchanged, soybean ending stocks are reduced 20 million bushels to 120 million. If realized, soybean ending stocks would be down 77% from 2019/20, and the lowest since 2013/14.”
From the WASDE report dated May 12, 2021: “U.S. soybean ending stocks for 2021/22 are projected at 140 million bushels, up 20 million from the 2020/21 forecast.”
The talk all year was that rationing would need to take place to avoid running out of soybeans. The November contract hit a high of $14.80 on June 7, indicating the peak of supply concerns.
Things changed at the end of September, when suddenly USDA found more soybeans. USDA in its quarterly grain stocks report revised 2020 production by an additional 80.8 million acres. That revision led to higher ending stocks this week, with a WASDE number of 320 million bushels running 135 million bushels more than just the month before. Since Sept. 30, soybean prices have lost more than $1 per bushel.
So, where did all of the soybeans suddenly come from? “USDA doesn’t measure, so to speak, every single bushel that’s out there,” said Arlan Suderman of StoneX. "It’s a statistical analysis … so, you hope they’re as accurate as can be. If they’re off by 2%, just 2%, that accounts for the difference. And that could simply be a calculation error that changed the dynamics and may someday revert the other way when the statistics go the other direction. So that does get frustrating.”
Suderman says the situation is more frustrating under the tight-stock scenario we’ve been operating in for so many months. “When we’re dealing with a 3 billion bushel corn carryout or a billion bushel soybean carryout, these things don’t have as much of a market impact. But when we’re talking about soybean stocks that are a three-percent stocks-to-use ratio, that’s not the time you want to see surprises.”
Darin Newsom, who operates his own analysis firm, is dubious about the additional bushels. “You don’t go to a 60-cent inverse in futures spreads with 250 million bushels left over,” he said. You don’t go to the type of national average basis that we saw throughout the majority of the marketing year with that type of stocks available. You don’t have a marketing year average price of $12 with that many stocks on hand.”