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Aftermath of USDA soy data to linger

Agriculture.com Staff 01/12/2006 @ 12:34pm

The USDA's Stocks and Crop Production reports on Thursday dumped a lot of negative data for already low trending soybean prices to deal with. As a result, the bearish news could be traded for awhile, one trader said.

Mark Pacelli, independent floor trader at the Chicago Board of Trade, told Agriculture Online it's hard not to be pessimistic about this soybean market.

"The bean outlook is pretty bad. I think farmers are going to have to brace themselves for a bean price with a number four in front of it (for new crop)," Pacelli said.

Pacelli added, "We have a wet blanket on our soybean market for quite awhile."

In its report on Thursday, USDA estimated 2005-2006 U.S. ending stocks at 500 million bushels, indicating more than abundant supplies.

For U.S. soybean stocks on hand as of December 1, 2005, USDA estimated 2.502 billion bushels, above analyst's estimates of 2.44 billion.

The U.S. soybean crop was put at 3.086 billion bushels, up 43 million bushels from December 2005, and also slightly below the 2004 record crop of 3.124 billion bushels.

USDA cut export projections for soybeans, taking it down 70 million bushels, to 950 million bushels.

World ending stocks for soybeans were raised to 53.15 million metric tons from 48.11 million metric tons.

The world stocks numbers reflect projections for Brazil soybean production for 2005-06 at 58.5 million metric tons and Argentina at 40.5 million metric tons, both unchanged from December's forecast.

"The only exceptions to being pessimistic on this market is a crop shortfall in Brazil. At one time, it looked like Argentina's dry conditions would hurt that crop, but everyday that goes by we seem to be getting past that probability with wet weather forecast for the next 5-7 days for that area."

When asked if all of this bearish bean news would impact the decision of the U.S. producer who has decided to plant more soybeans than corn this year, Pacelli said no.

"The 200 bushels per acre corn farmer would be less apt to switch to beans, but in the fringe areas, where you are getting 120 bushels of corn, those producers because of anhydrous expense and so on, would switch to beans," Pacelli said.

In addition, the price ratio from Nov beans to Dec corn is still telling the producer to plant beans, Pacelli said.

The USDA's Stocks and Crop Production reports on Thursday dumped a lot of negative data for already low trending soybean prices to deal with. As a result, the bearish news could be traded for awhile, one trader said.

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