Home / Markets / Markets Analysis / Soybeans market / Increase predicted in soybean new crop ending stocks

Increase predicted in soybean new crop ending stocks

Agriculture.com Staff 07/24/2009 @ 3:54pm

Soybeans: There is some speculation that a drop in corn acres will mean USDA will shift the soybean acreage numbers higher. We are not sure if that will happen. On their special press release it only mentioned corn and sorghum ground. Even if it does, will it be enough to actually impact prices (>1 million acres)?

Dependence on China (Old Crop): Out of our 1.278 billion bushels of old crop soybean sales China accounts for 703 million of that (55%). The good news for bulls is there is little risk right now of China canceling the 42 million bushels (19 boatloads) that have not been shipped. In fact, China continues to purchase old crop soybeans. At this point we are running ahead of USDA's planned pace for old crop soybeans and they will likely be forced to reduce old crop soybean ending stocks next month.

Dependence on China (New Crop): If there is a question here with exports it is on the new crop side. In the next two to three months it is likely China will continue their good new crop purchases. The US has a fresh crop ready in just a few weeks and we are the only real supplier in town. China already has 125 million bushels of our 241 million new crop total sales locked up. That 241 million in pre-bookings is a record for this time of year. So far, everything here is fitting into the bull story. USDA is looking at these numbers and is thinking exports will be larger next year which sounds plausible given the pace of new crop bookings. However, will China still be buying like crazy from us when Brazil and Argentina are planting in October? There is no doubt they will still come to us for needs through 2009. However, for the Jan-Aug 2010 timeframe we find it hard to believe they will have much secured for delivery when Argentina could have a record crop and Brail will be 1 mmt from its previous record. For the next two months or so, USDA will likely keep their big export estimates. As South America starts letting the trade know their planting totals we would imagine numbers will be revised lower.

Direction: Whether USDA adds to soybean acres or not, we will see nothing but an increase in new crop ending stocks. It may not happen next month but could be seen a few months down the road as noted above.

Trade Idea(s): (07/08) Sold Nov 910, risk 943, objective 855. Closed 915. Option Strategy(s): (06/09) Sold Nov 1240 call/sold Nov 800 put 62 1/4, risk to 55, objective 20. Closed 32 5/8. (06/16) Sold Nov 1220 call 45, risk 40, objective 0. Closed 11 1/8. (07/24) Bought Nov 940 put/ sold 1000 call 34 cents, risk to 14 cents, objective 70 cents. Closed 44 cents.

Soybeans: There is some speculation that a drop in corn acres will mean USDA will shift the soybean acreage numbers higher. We are not sure if that will happen. On their special press release it only mentioned corn and sorghum ground. Even if it does, will it be enough to actually impact prices (>1 million acres)?

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Big Picture: CME Trading Weather