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roarintiger1
Honored Advisor

The Soybean Situaton

Hopefully, someone way smarter than me can shed some light on the soybean market.  The current conditions probably have every market advisor on their ears. None of them predicted what is currently happening.

Just some highlights......                    

1. China continues to source beans.....whether they be SA or US beans......appears they can get them either place with no penalty.

2. It seems that SA is again having delays in shipping.

3. According to the export sales and the US stock numbers, the US has oversold our supply.

4. Market guys continue to preach that China will cancel orders.

5. The soybean prices continue to move higher.....which would seemingly make one think that China will not cancel soybeans which they have purchased weeks ago at a much lower price. Also, just how many folks have any beans left to sell?

6. Why would China cancel lower priced soybeans?    Unless of course, the prices in Brazil are much, much cheaper.

7. But China needs a contiuous flow of beans and they can't get them timely from Brazil.

8. USDA will never go below their pre-determined number for carryover stocks........even if the pipeline is almost empty.

9. Many now realize that (maybe too late) that our soybean supply needs rationed.

10. But........many end users still need our beans.

11. New crop bean prices seem late to the party....We need many more bean acres than what anyone can imagine

12. USDA......trying to keep a lid on things......already predicts record soybean acres AND without knowing ANY weather for the growing season, predicts record soybean yields.

13. USDA still says we have an ample supply of old beans.........where are they?

 

There is more to this story, but as you can see, this thing is a moving target.   And, some of the answers will be revealed as we travel down the road.

3 Replies
giolucas
Veteran Advisor

Re: The Soybean Situaton

Roaringtiger,

 

Very nice summary and I also think that palouser's comment the other day sums it up:

 

 Tuesday 

China can cancel and rebuy beans but at some point it has to be sure there are arrangements to keep the conveyor belt of beans to their shores full. The 'big purchase' from US supplies is completed before a major new price rise might occur at the prospect that Brazilian logistics will be the bottleneck for China's conveyor. Plan 'B', if you will. No doubt in my mind they were aware they might have to hedge bets. They did.

 

Considering China is importing nearly 60 MMT of beans this sale is only important in the sense that US supplies are limited. But they know we will deliver when needed. They will monitor Brazil's logistics which are likely to be deteriorating as roads get soupy and ship loaders at the ports fail

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highyields
Senior Contributor

Re: The Soybean Situaton

I don't think China can afford to cancel beans,,,,I just read yesterday that our domestic users are booked, but yet I had my local basis  narrow up by 2 cents yesterday,,,that is after a strong performance by the futures.   I think the bean crop was LESS then what USDA has reported and DEMAND might be evenHIGHER.     To top it all off I've been reading that Brazil is worried about their coffee and Sugar crops due to dry conditions.  I think Brazil's Soybean crop is smaller then what has been reporting.    and the ports in Brazil cannot load in the rain, southern Brazil had some rain and are probably behind on shipping.   

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sw363535
Honored Advisor

Re: The Soybean Situaton

Is it possible that China is saying "let the US depend on Brazil's ability to deliver"

We are going to be short ----- let the US wait in those ports.