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USDA Seen Raising Soybean Ending Stocks

Brazil's soybean output seen climbing.

The soybean market ended the week on a rather quiet note, as follow-through selling from yesterday extended into today.

Beans even shrugged off some demand news, as the USDA announced the sale of 268K beans to China and 129K beans to unknown this morning. Technically, the market took out both the 20- and 50-day MA early in the session, but we managed to settle above the both averages. A close below the averages would be bearish.

Weather-wise, the overnight weather models continue to pull rains forward from the 11- to 15-day into the six- to 10-day for Argentina, and they are adding rains in the 11- to 15-day. This took some of the wind out of the weather bulls’ sails. It is reported that Argentina is 56% planted. This is behind last year’s 61% planted pace and is actually the slowest pace in 20 years.

The USDA will be releasing its December monthly supply/demand report on Tuesday (WASDE). We see soybean ending stocks raised from 425 million bushels last month to 445. The average trade guess is near that at 438.

Allendale sees a 25-million-bushel cut to exports but has a 5 million lower import number than USDA November. This export situation is a little worse than just 25 million bushels, but we think they will only make small revisions on hopes that sales will pick up.

For South American production, we see USDA raising Brazil's crop from 108.0 million tonnes to 108.5 (108.2 trade est).

We see Argentina left unchanged at 57.0 mt (56.5 trade est). Look for the choppy trade action we have seen recently continue as this is the time of year we tend to see volatile moves as the lighter-than-normal holiday trade volume allows for moves to be exaggerated in either direction.

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