Chicago Soybeans: Review Of The Week
July soybeans closed at $11.34 Friday, up 15 cents on the day and 32 higher on the week.
Demand has been the main driving force for beans this week, with weekly export sales of 775,400 MT slanted heavily in favour of old crop, where stocks are already tight, with China booking 197,900 MT of the 654,400 MT total. The remaining sales of 121,000 MT for 2009/10 delivery were mostly increases for unknown destinations (frequently China) at 124,000 MT.
The USDA are due out Tuesday with their revised production and stocks estimates, with the trade on average expecting old crop stocks reduced to around 130 million bushels, from 165 million last month, in the light of the continued weight of Chinese demand. Considering that the previous week's export sales came in at 834,600 MT for old crop alone (of which China took 468,400 MT), there are some who believe that the USDA could reduced old crop stocks below 100 million bushels this coming week.
The bears still keep talking of rumours of Chinese cancellations, maybe they are starting them - somebody must be, but every week they keep failing to appear. Meanwhile China's existing purchases keep floating out of the door. Actual total US exports this week were 386,400 MT - up 38% on a week ago - I wonder if you can guess where the vast majority (225,600 MT) of that was headed?
Normally China would be shopping in South America by now, but of course they have a whole set of their own problems down there in Argentina this year, and whilst the US dollar remains weak the Chinese keep coming back.
Further forward the outlook for beans isn't so ragingly bullish, any further corn planting delays in the US will mean more soybean acres, but we won't have a concrete idea of what those acres might be until the end of June.
Meanwhile, what's that old saying? The trend is your friend:
CBOT Soybeans close higher on USDA data
CBOT soybeans closed with decent gains Tuesday after the much-awaited USDA crop report underpinned the market my pegging 2008 US production at 2.97 billion bushels, slightly lower than trade estimates of 3.001 billion.
USDA lowered the yield to 40.5 bu/ac down from 41.6 in July but increased harvested acres to 73.3 up from July's estimate of 72.1 million acres
November soybeans ended 18 cents higher at $12.18/bushel and December soymeal closed $11.50 higher at $332.00/ton.
The USDA put US soybean ending stocks for 2007/08 at 135 million bushels, the tightest since 2003.
The market was overdue a correction after recent steep declines but overall the trend remains bearish a trader said.
Whilst nearby weather remains largely nonthreatening the market could work a little lower yet, but the threat of early frost significantly damaging late-planted beans will likely prevent this market working much lower.
Still, soybeans still appear to be inextricably linked to crude oil & will continue to follow that market closely.
Friday CBOT Closing Comments: Soybeans
Beans actually behaved pretty predictably for once. Nearby July closed 21c higher, with gains gradually diminishing as we go further forward into new-crop months which posted gains of 6-9c.
The USDA report came in pretty much bang on the button of expectations forecasting 2008-09 U.S. soybean ending stocks at 140 million bushels, compared to 175 million in June and the average analyst estimate of 139 million. The USDA pegged 2007-08 soybean stocks at 125 million, unchanged from June. The average of analysts' pre-report estimates was 123 million.
A choppy session saw new-crop Nov fluctuate between 24c down and 33c up, before deciding to meet in the middle and settle 9c firmer.
The nears supported by the tight balance sheet and the prospect of a pick up of exports if & when the Argy farmers eject their toys from the perambulator (again).
The Midwest weather looks non-threatening at the moment, but there will undoubtedly be weather scares ahead in August (too hot/dry) and beyond (too cold/early frost). I'll still take prices to work lower once the crop is in come October.
On the week as a whole a 33 1/2-cent drop in CBOT August futures also took the value of soybeans in U.S. storage off recent record highs.
