U.S. feels world's soy demand
The bean market news has been generally positive this week. Remember there was a washout of speculative longs followed by a recovery late last week. Helping the market were several sales announced to China and to Unknown in the daily reporting system.
Since the U.S. is the only country with substantial exportable supplies, the world’s strong demand for protein has ended up at our doorstep. Export sales are around 73 percent of the USDA estimate, and the marketing year is only eight weeks old. (Large volumes of sales did occur before the marketing year began.)
The domestic crush has also been strong, although since the Census Bureau gave up doing the monthly crush report, quality data has been lacking. The monthly NOPA report (an industry association) is now the only data available. But crush margins, a reflection of demand, have been strong.
The bean story is really the exports, and more specifically, the exports in the first half of the marketing year. The U.S. needs to send phenomenal amounts of beans and meal out the door before March 1. The goal of the marketplace is to have record-low soybean stocks at that time. It is hoped that Brazil will be able to take over at that time.
This all needs to go very smoothly. The U.S. farmer needs to sell more beans sooner than in years past. The U.S. needs to get down to a minimum number of beans. For example, usage in the first six months of the crop year could be 75 percent of the entire 12-month number.
Knowing this, keep an eye on Brazilian and Argentine weather and planting progress. Record-large South American crops are necessary to keep the market supplied with soybeans. Eventually, when harvest begins, the market will also need to pay attention to the transportation and port situation in Brazil — remember, everything needs to go smoothly!