Inside the Soybean Inventory Rise in December

In the preceding part of this series, we discussed the global stock-to-use ratio for corn and how it has impacted global corn prices. In this part, we’ll discuss the stock-to-use ratio for soybeans and how this has impacted soybean prices in December.

The global soybean stock-to-use ratio for soybeans rose to ~25.1% in December 2016, as compared to 24.8% in November 2016. The global soybean stock-to-use ratio is higher in December 2016 than the global stock-to-use ratio of 24.5% in December 2016.

The global soybean stock-to-use ratio was also lower than the past three consecutive years, as you can see in the above chart.

Month-over-month, the soybean inventory in December 2016 rose to 82.9 million metric tons from 81.5 million metric tons in November 2016—a 1.6% increase, according to the US Department of Agriculture. As compared to December 2015, the current inventory levels rose 7.2% from 77.2 million metric tons.

It’s important for seed investors to track the stock-to-use ratio for soybeans. About 15% of Monsanto’s (MON) revenue in 2015 came from soybean seeds and traits, while ~39.7% of the revenue came from corn seeds and traits. In 2015, about 12% of Syngenta’s (SYT) revenue came from its corn and soybean seed business. Investors in these companies (NANR) and in fertilizer companies such as PotashCorp (POT) and CF Industries (CF) must track these two commodities and their prices.

In the next part, we’ll discuss soybean prices.