Soybean Fundamental Support
The soybean market caught a bid today as shorts booked profits in front of Friday's WASDE report. The equity market was higher and the U.S. dollar was lower and that added to the markets strength. The USDA did announce the sale of 120,000 tonnes of beans to an unknown destination this morning and that also gave the market a boost. Bloomberg newswires released the results of their analyst’s survey for Friday’s supply/demand numbers. They reported the average estimate is for the national soybean yield to come in at 46.1 bpa down from last month’s 46.9 bpa estimate. This is a little higher than the mid 45's number that most in the trade were talking up a few weeks back. Total production is seen declining from 3.916 billion compared to last month’s 3.841 billion estimate.
Ending stocks are expected to fall from 470 to 424. Allendale is projecting that the USDA will put the national yield at 45.4 bpa, total production at 3.791, and ending stocks at 421 million bushels. It does look like most of the analyst who participated in the survey are anticipating for the USDA to not make any acreage adjustment on this report. We agree with this assessment as we are not looking for the USDA to make acreage adjustment either. The only time the USDA adjusted bean acres on the September report in the last 20 years was in 2002 when they lowered harvested acres by 230,000. We do look for the USDA to make acreage adjustments to the downside on the October report.
In news out of China today, the General Administration of Customs reported August soybean imports at 7.78 million tonnes. This is 27% over last year’s pace and continues the strong import pace we have be seeing since June. If the government's estimate of September imports at 6.47 mt comes true then the Oct-Sep import will run 77.561 mt and would end up over USDA's current 77.0 estimate. With China’s aggressive import pace the past few months it definitely looks like they are well-stocked. The aggressive imports pace has not helped their end-users as their processing margins are currently -$14 per metric tonne processed losses.
This is negative news for the US producers as this is a time where we ship them a bulk of our beans. If their ports are full and the margins in the red there is little incentive for them to pick up their buying pace from the United States. We have sold 494 million bushels year to date. Last year at this time we had already sold 796 million bushels. We continue to anticipate a choppy trade over the next few weeks until the trade gets a better handle on this year’s crop but would be surprise to see a little more short covering show up before Friday’s numbers are released. We look for sellers (producers) to show up whenever we trade over the $9.00 level and buyers (end-users) will step up as the market gets near last week’s lows.