USDA’s Latest Supply & Demand Summary for Cotton & Soy Complex

Soya oil finished lower on Tuesday. Traders and speculators waited for fresh cues from the November month’s USDA report. The data released from USDA indicated lower production for US soybean for 2021/22 and exports, followed by a rise in the ending stock estimates (data compared with the October release). Soybean production is forecast at 4.42 billion bushels, down 23 million on lower yields.

Exports are lower this month reflecting reduced global imports and lower-than-expected shipments through October. With consumption estimates reduced more than supply, US soybean ending stocks are raised 20 million bushels. Global 2021/22 soybean production estimate is reduced 1.1 million tons to 384.0 million as lower production for the United States and Argentina is partly offset by rise in Indian production estimate. Argentina’s production is lowered 1.5 million tons to 49.5 million on a lower harvested area. Global soybean stocks are reduced 0.8 million tons to 103.8 million as lower stocks for Argentina and China are partly offset by higher U.S. stocks. The data overall seems neutral from a pricing perspective. 

Soybean was range-bound yesterday as most of the participants preferred cautious trading ahead of the USDA release. The data released from the report appears neutral from a pricing perspective. Global 2021/22 soybean production estimate is reduced 1.1 million tons to 384.0 million as lower production for the United States and Argentina is partly offset by rise in Indian production estimate. Production for India is raised 0.9 million tons to 11.9 million based on data from the Soybean Processors Association of India.

Argentina’s production is lowered 1.5 million tons to 49.5 million on a lower harvested area. Global soybean stocks are reduced 0.8 million tons to 103.8 million as lower stocks for Argentina and China are partly offset by higher U.S. stocks. The data overall seems neutral from a pricing perspective.  With new season arrivals expected to intensify, the upward price movement in soya oil and soybean shall be capped this week.

The interpretation of the USDA release is positive from a long-term pricing perspective. This month’s 2021/22 U.S. cotton estimates are largely unchanged from October. The U.S. production forecast is slightly higher, at 18.2 million bales, while domestic mill use and exports are unchanged. U.S. ending stocks are 200,000 bales higher at 3.4 million—19 percent of use—and 250,000 above the previous year.

The global cotton balance sheets for 2021/22 include higher production and consumption, and slightly lower ending stocks.  World ending stocks are projected at 86.9 million bales, 200,000 bales lower than in October, and 2.4 million bales lower than in 2020/21.