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Supply and Demand tidbits

Agriculture.com Staff 04/16/2010 @ 2:08pm

The Brazilian farmer has not been an aggressive soybean seller off the combine. Despite the massive harvest, increased storage capacity means more of the crop is being tucked away. The exchange rate situationËœthe Brazilian real is very strongËœalso discourages sales. Finally, transportation charges were very high at the beginning of harvest, although this is moderating.

Brazilian farmers do tend to sell on the rallies, like we have seen this week. However, the math goes like this: a larger crop and a smaller percentage sold (versus last year) equals many more million metric tons left to sell in the coming months. Brazilian farmers may still have a substantial number of beans to sell when US farmers are selling beans off the combine this fall.

There is another positive fundamental feature to the market this week. It is nothing new China. That may be frustrating to traders who occasionally feel the market has a one track mind. For corn, there is continuing talk about possible imports in the wake of strong Chinese domestic prices.

For soybeans, it seems like several analysts have increased their Chinese import estimates for this year and the coming year. The unknown is the continuing trade spat between China and Argentina, with the fate of Argentine soyoil sales hanging in the balance. Ongoing issues mean the Chinese could import less soyoil and more whole soybeans as a result.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

The Brazilian farmer has not been an aggressive soybean seller off the combine. Despite the massive harvest, increased storage capacity means more of the crop is being tucked away. The exchange rate situationËœthe Brazilian real is very strongËœalso discourages sales. Finally, transportation charges were very high at the beginning of harvest, although this is moderating.

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Soybeans Rally on Demand, Weather