The first of the month is always marked with the USDA Grain Crushing Report for corn, and the Fats & Oils report for soybeans.
Starting with the corn crush for ethanol, February crush came in at 425 mil. bushels, 8 million below our estimate, and yet another month below what is needed to meet the USDA corn crush for ethanol target of 5.6 billion bushels.
Weekly EIA data released earlier today, shown below, was also disappointing. Again, below the pace needed to meet the USDA target. At this point we think it is likely the USDA will lower their corn use for ethanol by 50-75 million bushels, current pace suggests at least such a cut is needed unless something changes.
The Fats & Oils report on the other hand provided continued welcome news. Soybean crush came in at 214.2 mil bushels, just 0.2 below our estimate. Pace remains above what is needed to hit USDA target by about 50 mil. bushels.
What is somewhat worrisome for this market is that the crush has been driven by oil margins, leading to oil production outpacing oil demand, now for several consecutive months. 2024/25 was also a year of large production, but this continued pace has lead to USDA oil stocks surging to +35% vs. last year and +15% vs. the 5-year average.
