The majority of the present control of the value of soybeans is the value of the US dollar, crude oil, precious metals as well as the technical and fundamental outlook for soybeans as well as its products of meal and soybean oil.
Fundamentally a couple of points to consider are the developments first with regards to soybean exports, we simply are not content to export 35 to 37% of the annual production as we did mid decade but rather 41 to 43%. And of course our number one client we export to is China as imports from the US have risen from 9.7 million metric tonnes in 2005/06 to a USDA level for 2009/10 of 20 MMT, with a much more realistic 21.04 MMT. China production of soybeans is locked in a range of 17.4 MMT high to a low of 14 MMT low with 2009/10 at 14.5 MMT.
Allendale Inc is well aware of the fact per capita veg oil consumption for the United States (309 million population) is 83.7 pounds vs 83.4 pounds in 2005/06 with China (1.336 billion population) at 37.7 pounds vs 32.6 pounds in 2005/06. Who will grow enough veg oils to fully westernize China? Certainly not China as it has proven it is more concerned with holding the majority of the share of world stocks of wheat 31%, corn 36%, rice 50% (all starches) and even cotton at 34%. When it comes to soybean end stocks, Allendale Inc has been very aware of how Argentina and then Brazil own the majority and then the US and then China ownership to a lesser degree. You have witnesses for the most recent two marketing years how China is taking over the #3 soybean end stocks ownership from the United States and shows very little signs of relenting. China now owns 16% of the world end stocks and Allendale Inc continues to suggest, food is the most powerful weapon in the world. For comparison sakes China is projected to own 9.7 million tonnes of the 59.8 MMT of world end stocks with the US holding 6.67 MMT.
Take a look at the chart of the China trend of soybean crush and you will be able to see first hand how just in the past decade the level has increased from 18.9 MMT to 44.78 MMT with only a momentary pause from in 2003/04. China soybean production remains constant but total imports are higher along with China end ownership and ultimately crush is higher.
Here are a few questions you need to ask yourself as we enter this year, keeping in mind your corn-soybean rotation, are you economically more likely to plant more corn than beans? For the first time dating back to 2006 will US stocks to use go double digit and will world stocks to use venture into 20%? Your biggest concern should relate to futures and basis levels for your particular business. How will you hedge-market the soybeans you intend to plant in 2010?
We welcome your questions and comments.........Joe Victor
Allendale Inc welcomes any questions you may have by calling 800-551-4626 or
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2010
