Sep 1, 2014
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Current Marketing Thoughts

RSS By: Kevin Van Trump, AgWeb.com

Kevin Van Trump has over 20 years of experience in the grain and livestock industry.

Will USDA Bean Stocks be a Record Low?

Apr 07, 2014

Soybeans traders continue to ask, "how high is high enough?" There is no question the trade and the USDA are trying to ration nearby demand, the question is how high will prices have to reach before global and domestic buyers throw in the towel? Keep in mind, export shipments are now at about 97% of USDA's current export forecast and we still have well over half of the marketing year left. With this in mind, you have to believe the USDA will once again tighten ending stocks.  By how much, who knows, especially when you consider the fact we still have close to 4 million metric tons sitting on the books marked as "sold" but still haven't shipped as of yet?  To say most inside the trade seem extremely uncertain would be an understatement. Several seasoned veterans I know are thinking the USDA will remain conservative and won't lower soy ending stocks by any more than 5-10 million bushels. They seem fairly confident in the fact a move from the current 145 million estimate down to the 135 million level would be about the lowest the USDA will be willing to drop old-crop ending stocks. However, there are others in the trade who believe the USDA has simply been biding time to see how many cargoes of US beans China would actually cancel. Since China has opted to cancel more Brazilian cargoes than US cargoes as of late, there is talk the USDA will have no choice but to bite the bullet, shock the trade to some extent and show an ending stocks number closer to 110-120 million. If this were to be the case you would have to believe old-crop prices would jump immediately higher, basically blowing through $15.00 like "Grant took Richmond..." In fact a soy stock number below 120 million would be a huge shock to the trade, and one that could eventually push old-crop prices up closer to $16.00 per bushel.  Obviously this would also pull new-crop prices higher as well.  Moral of the story, it will be very interesting to see how the USDA decides to play this out.  Wednesday could be a wild one! CLICK HERE for my daily report......

What About Chinese Demand? Even though I have heard talk as of late that the Chinese "crush margins" have drastically improved, I am still deeply concerned about the livestock margins and the affect it is having on overall feed demand. Ken Morrison this week brought up a terrific point on Todd Gleason's Will580am "Commodity Week" radio broadcast, "This is the first time in modern history that pork prices in China have actually been cheaper than pork prices here in the US." Take a minute and think about what that means for hog "margins" in China with corn prices over $9.00 per bushel and soybean prices over $18.00 per bushel...Ouch!

Brazilian Soybeans Coming To A Crusher Near You! That's right, one of the first cargoes of Brazilian soybeans landed this weekend near the mouth of the Mighty Mississippi. Talk is the the vessel was loaded out of Brazil's Port of Santo's back about a month ago. The market is obviously banking on the fact imports of South American soybeans and soymeal are going to help meet the demand requirements here in the US. As you can see from the map below, New Orleans isn't real far from South America... Here come the SAM soybeans!       CLICK HERE for my daily report....
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