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Benjamin · 26-01-2006, 10:22

Soybean Fundamental Outlook, 2006
January 18, 2006

The beginning of the 2006 season may very well witness the highest prices for the soybean complex we will see for the crop year. The most recent USDA agricultural supply and demand estimates echoes this sentiment with a confirmation of larger than anticipated stocks, supply, and carryout. For a more complete understanding it is important to break the soybean complex into its individual components: soybeans, soybean meal, and soybean oil.

Soybeans

Once again, the old adage: "Big crops get bigger" has manifested itself as the soybean production number was raised to 3.086 billion bushels, up 43 million bushels from the figure reported in December, 2005. This production number was realized because the USDA raised the yield per acre by 0.6 to 43.3. This number shows the resilience of the genetically modified plants as rains this past growing season were received just in time and the yields proved to be some of the largest on record.

These production numbers, coupled with the current government demand estimates, will leave the ending stocks at a gargantuan 505 million bushels. This figure is the second highest carryout on record. While this carryover figure is extremely large, it appears likely it will continue to grow most likely approaching 600 million bushels in the months to come. This is likely as the USDA export figure of 950 million bushels, down from 1.020 billion bushels in December, is most likely still too optimistic. The current weekly export pace is approximately 25 percent behind a year ago. Assuming an overall reduction of 20 percent, the final export figure would be further reduced by another 70 million bushels, thus increasing the final carryover to 570 million bushels. This calculation assumes the USDA crush numbers are accurate and at present we will not debate this point.

In addition to the growth in the domestic numbers, the USDA also raised the Brazilian old crop numbers by 2 million tons. The current weather situation in the southern hemisphere looks good with but a few problem areas. Assuming a normal growing season from this point forward the world carryover will have grown over 12 million tons since the 2003/2004-crop year, 35.68 million tons versus 48.11 million tons. The primary point is that with soybeans near $6.00 presently, be on the lookout for a potential break that could take the market below $5.00 per bushel.

26-01-2006, 10:22	#29
Benjamin TBB Family Registriert seit: Mar 2004 Beiträge: 10.374	Soybean Fundamental Outlook, 2006 January 18, 2006 The beginning of the 2006 season may very well witness the highest prices for the soybean complex we will see for the crop year. The most recent USDA agricultural supply and demand estimates echoes this sentiment with a confirmation of larger than anticipated stocks, supply, and carryout. For a more complete understanding it is important to break the soybean complex into its individual components: soybeans, soybean meal, and soybean oil. Soybeans Once again, the old adage: "Big crops get bigger" has manifested itself as the soybean production number was raised to 3.086 billion bushels, up 43 million bushels from the figure reported in December, 2005. This production number was realized because the USDA raised the yield per acre by 0.6 to 43.3. This number shows the resilience of the genetically modified plants as rains this past growing season were received just in time and the yields proved to be some of the largest on record. These production numbers, coupled with the current government demand estimates, will leave the ending stocks at a gargantuan 505 million bushels. This figure is the second highest carryout on record. While this carryover figure is extremely large, it appears likely it will continue to grow most likely approaching 600 million bushels in the months to come. This is likely as the USDA export figure of 950 million bushels, down from 1.020 billion bushels in December, is most likely still too optimistic. The current weekly export pace is approximately 25 percent behind a year ago. Assuming an overall reduction of 20 percent, the final export figure would be further reduced by another 70 million bushels, thus increasing the final carryover to 570 million bushels. This calculation assumes the USDA crush numbers are accurate and at present we will not debate this point. In addition to the growth in the domestic numbers, the USDA also raised the Brazilian old crop numbers by 2 million tons. The current weather situation in the southern hemisphere looks good with but a few problem areas. Assuming a normal growing season from this point forward the world carryover will have grown over 12 million tons since the 2003/2004-crop year, 35.68 million tons versus 48.11 million tons. The primary point is that with soybeans near $6.00 presently, be on the lookout for a potential break that could take the market below $5.00 per bushel.