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07-13-2017 10:24 AM
Interesting reads on the subject of ending stocks ........
I still find it facination that a society of 400 million residents is not concerned with a 36 day supply of this product but with headlines like this the "panic attack" media confuses me with this type of contradiction. ......
USDA TIGHTENS U.S. SOYBEAN ENDING STOCKS, SUPPLIES REMAIN BIG
"On a world basis a stocks/use ratio for wheat under 20% has typically led to strong price advances. For corn, the comparable number appears to be under 12% . For soybeans, the critical level is below 10%. It is useful to calculate stocks to use ratios for different crops and compare these projections with historical averages"
"The analysis did not result in a strong enough fit to render the projected soybean stocks-to-use ratio useful in projecting the marketing year U.S. average price of soybeans."
Illinois analysis says that ending stocks are not an indicator of price as usda promotes...........
07-13-2017 10:29 AM
SW....i don't understand it...........
i think things have got so insane........people have become so bold in their insanity of saying "if i say it, it is true, no matter what the facts
it's all a bunch of #$%! %^&!
07-13-2017 10:50 AM
when you have a "replenishment" of stocks every six months like we do with soybeans...
well, it takes the edge off the tried and true stocks/use formula used for many years
now, the reverse of that can be true if both north and south hemispheres have problems
07-13-2017 11:22 AM
The university of Illinois publication I referenced somewhere else reinforced your thought.
Their conclusion was that stocks ratios are somewhat meaningless for beans since there is a 6 months season for beans.
China is the wildcard in that thought since they dominate the SA production. Like many parts of our economy where there are too few players on the field, it gets hard to rely on any leading indicators and we get reactionary after the fact. We loose concepts like "price buying acres" the price just changes too quickly both ways...........we just had an example.
I wonder if the super spin this week on a relatively bland report had more to do with the run up in futures the last two weeks, and trying to get the speculation to stop. No one gets the report early, but it seems like the spin is prepared in advance and there is a race to find something that supports it. The old "spin doctor" on WKRP was more to my liking. I enjoyed the bland market data of my youth.
Maybe media is reaching its end of life crisis.
cheapo has a point and it does feel like society is panicing some on many levels. Articles sound sensational till you read them. And maybe that is what it takes to get folks to listen. Expected... in a country where political parties are worshiped and Churches are avoided. History hasn't got a good record with those conditions.
07-13-2017 11:34 AM
My simple brain just thought the market was doing its normal job of punishing the guys having to price their bushels on price later contracts due to expire in a couple of weeks. More contracts are being written with earlier due dates.
07-13-2017 12:16 PM - edited 07-13-2017 12:22 PM
I resemble that "simple brain" comment. I think today's price action has little to do with yesterday's report, and more to do with recent price run-up, some scattered rain in the forecast, cash sales/contracts leading up to the report, and "spin" consumpton. As far as production goes, other than some scattered planting problems that should be accounted for in the numbers, it is too early (July 1) for USDA to make many adjustments, thinking back to 2012 as an extreme example (drought already evident in a large area), also thinking about when I lived in Indiana when it was a drought in May (maybe 1988?).
As for beans and the estimated ending stocks number, what the professors said does make sense. Still, with it being far to early to really make meaningful production projections, it also makes sense that the estimated ending stocks number is not very reliable. Seriously, how reliable is, "Chances are 9 out of 10 (90% confidence level) that the difference will not exceed 93.0 percent." We don't need statistics to get "that close" -- I wonder what the percentage error factor would be at a 95% confidence level?
Also, still think the historical analyses, including/especially the "reliability" factors in later report tables that few look at, really needs to be based on the past 20 years, instead of the past 36.
07-13-2017 07:22 PM
Don't forget that when assuming Brazil will fill the soybean needs of the world, they have way more corruption than we have here in the U.S..........well.........maybe. Quick, we need some fake news. Now, where's that CNN reporter when you need him?
07-13-2017 07:35 PM
07-14-2017 06:04 AM
Up here in spring wheat country lots of acres are abandoned due to drought. The report left acres the same as if its all good! The analysts all concluded that the acreage reduction will come in the august report. The trouble with that is its harvest time and prices never go up even if there is a drought. The trade will be surprised at that spring wheat acres will be below their expectations because of the huge switch to soybeans. Me included. Farmers were tired of all the discounts they dreamed up to get wheat for $1.00-$2.00 less than board price.
One final thought. We shouldnt be surprised with skewed reports. I remember a similar report years ago where they magically found 300 million bushels in china which killed the market for years!