Soybean Demand Continues to Surprise the Bears
Dec 13, 2012
Soy bulls are also concerned about the neutral-to-bearish weather outlook in South America. Thoughts of record soybean production is becoming more of a reality, but unlike the corn or wheat market, "Demand" for soy is a story the bulls can still rally behind. In fact just yesterday Chinese buyers were rumored to be in looking for another 4-6 cargos of beans. There is also talk that the NOPA crush numbers (released tomorrow) could be very strong. Most in the trade seemed to be looking for a 157.5 million bushel estimate. Meal sales have been very strong, and the cash side of the trade is starting to really heat up. Our thoughts that the bean "basis" might soon start improving looks as if it is starting to play out. Just yesterday I heard reports that crushers in parts of Iowa are now paying +$0.35 cents over the JAN13 price, IL in areas at +$0.25 over, and the guys up in Minnesota are also reporting a positive basis. My guess is the bears can talk all they want about a huge South American crop, but they are going to have a tough time breaking flat price as long as we continue to see strong export sales and a strong cash market. Do realize China's weekly soybean tally this week totaled over 1MMT's. The Chinese demand continues to surprise the bears and certainly has to be acknowledged moving forward. Keep in mind we are just 14 weeks into the marketing year and we already have over 80% of our estimated exports sold.
USDA released weekly export sales data this morning showing another round of huge soybean sales, well above expectations. Corn and wheat sales better than last week and in line with expectations.
- Corn export sales reported at 272,600. The trade was looking for a number between 150,000 and 450,000. Last week sales were reported at 47,000.
- Soybean export sales reported at 1.3194 million. The trade was looking for a number between 500,000 and 900,000. Last week sales were reported at 1.143MT's...Once again very strong sales.
- Wheat export sales reported at 573,500. The trade was looking for a number between 300,000 and 600,000. Last week sales were reported at 353,000
As for today, the trade will be trying to get it's hand around the latest "supply vs. demand" picture. On top of the USDA recently pushing global corn production higher, Strategie Grains has come out and estimated the EU 2013/14 corn crop at 63MMT's, up some 16%. They are also forecasting the EU 2013/14 soft wheat crop at 134.2MMT's, up about 9%. Lets also keep in mind the South American farmers look as if they are going to have a very good opportunity to produce a record soybean crop. On the flip side the cash corn and soybean market here at home remains strong. The question is how long will our window of opportunity last? How long will the flat price and the basis remain strong?
For the rest of the story including more insight into what traders believe are influencing market prices currently, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond. If you are looking to be educated and not just told what to do, simply click here and get started!