73.9 Million Isn't Enough

Posted by Nogger - a legend in his own mind at 09:49 | Categorized as

01/04/12 -- Whichever way you look at it 73.9 million acres of US soybeans this spring is a very low number. Oil World said last week that 2011/12 world soybean production is set to decline by 22-23 MMT this season. The USDA currently say 21 MMT, but that is using a Brazilian production estimate of 68.5 MMT and an Argentine one of 46.5 MMT.

Local forecasts are lower. AgRural cut their 2011/12 Brazilian soy estimate by 2% last week to 66.7 MMT. The Buenos Aires Exchange peg the Argentine soybean crop at 45 MMT, the Ag Ministry say 44.0 MMT and the Rosario Exchange 44.5 MMT.

It seems likely therefore that the USDA are, shall we say, a little optimistic that production will "only" be down 21 MMT. To kick off the coming season then the lowest US soybean plantings since 2007 aren't really what the doctor ordered to remedy the inevitable strong demand from China.

A serious weather scare in the US this summer (and who would want to bet heavily against that?) could really set the cat amongst the pigeons, especially if backed by heavy fund buying (and who would want to bet against that either?) - USD14/bu could look cheap, very cheap.