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SOYBEAN OUTLOOK
09
1.800.800.3840April 2009 Soybean Outlook
introduction
The soybean market has become a tale of two crops. The old crop soybeans, harvested last fall and the new crop soybeans that will be planted this spring. Last year soybean acres fell as the price of corn soared and ethanol demand seemed insatiable. This year the insatiable demand has been for soybeans from China. In addition to their normal demand, China bought soybeans to build reserve stocks. This hoarding may have been in response to concerns over the tight US stocks situation. New crop soybean price prospects are not as optimistic. Additional acres and slowing bio fuel demand should help rebuild US soybean stocks this year.
March 31 Planting Intentions
The March 31 planting report started the beginning of the growing season in soybeans off on a bullish note. The trade was looking for a soybean acreage number of 79.25 million. The USDA number was 76.03 million, up a mere 330,000 from 2008. This friendly number sent soybeans soaring. Old crop May futures added $1 in price from the planting intentions number to the April Supply/ Demand report. New crop November futures added 80 cents over the same period. Daniels trading feels the USDA planting numbers are inaccurate. If we net out double crop soybeans, we feel the USDA is missing 5 million acres. Without the rally in beans, we expected 2 million additional acres. The run up in futures should buy back an additional 1 million acres upping our estimate for the June number to 79.03 or closer to the original trade estimate for March 31.
Argentina
Argentina has been a hot topic in the world soybean trade on two fronts, labor strikes and weather. The first issue in Argentina was the terrible drought conditions they witnessed this growing season. The USDA reduced their crop estimate to 39 MM in the April Supply/ Demand report. This is down from their 50.5 MMT estimate in the December 2008 Supply/ Demand report. This 10.5 MMT came right off their stocks available for export.
The second issue in Argentina has been recurring strikes by famers and/ or truckers. The farmers have been protesting a 35% export tax that was implemented last year as a means to curb domestic food inflation. Food inflation has subsided, however Argentinean officials do not wish to or can not afford to forgo the revenue. The farmer is angry that he has been hurt by a dramatic drop in prices since last spring and feels the export tax adds insult to injury. The farmer in Argentina has been a reluctant seller waiting for the government to compromise on the tax. If they do not sell beans, the government collects 35% of zero. We will eventually see a resolution to this issue, until then is very supportive to old crop US beans.
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2Brazil
The Brazilian farmer witnessed his difficulties last year as the strong Brazilian Real caused him pain. The world's largest bean importer, China, pegs their currency to the US Dollar. The strong Real ben-efited US exports to China. High input costs and a banking crisis curbed acreage expansion in Brazil this past growing season. The USDA estimated the Brazilian crop at 57 MMT in their April Supply/ Demand, down 2 MMT from their December estimate. The weakening of the Real and the relatively high price of soybeans should expand acreage in Brazil next year by 5-10%. We would expect, with normal weather, that the Brazilian bean crop next year could approach 65 MMT.
China
The world's largest population continues to be the largest importer of soybeans. The Chinese, in addition to their normal demand, decided to build reserve stocks of soybeans. The Chinese have shunned Argen-tinean soybeans in favor of US and Brazilian origin. The US is the most reliable source for exports. The Brazilians generally witness a port worker strike every year. In addition, infrastructure limitations routinely cause harvest problems. It is commonplace to hear of 60 mile long lines of trucks carrying soybeans at port facilities. Chinese crush margins remain strong which will keep Chinese processors buying.
Daniels Trading offers the following Supply/ Demand table:
2008/2009 2008/2009
SOYBEANS usda Daniels USDA DanielsPlanted 75.7 75.7 76.03 7... [download for more]
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