WEEKLY SOYBEAN REVIEW: Is Old Crop Soy Demand Strong Enough?
Weak closing for beans on Friday.
Bryce Knorr
Published: Dec 15, 2008
At first blush the soybean market had a nice ride last week, posting gains of 70 cents. But beans closed weak on Friday, with traders wondering just how good of legs the complex has.
I remain most worried about new crop. Farm Futures on Thursday and then Informa on Friday predicted big increases in bean acres next spring, pretty much by default. New crop beans are cheap, relatively, to plant, and are above break-evens for the typical producer. The same can't be said for the alternatives: corn, cotton or wheat.
Of course, an increase in new crop plantings has been pretty obvious for a while. But the old crop picture is becoming a big murkier as well. USDA underscored that on Thursday by keepings its carryout estimate for Sept. 1 steady. Based on the current export trend, it appears the agency will need to up its forecast of sales again.
USDA did increase exports on Thursday, but it also cut back on crush. Processor margins remain poor, in part because bean oil has completely lost its biofuel luster. That's put the heavy lifting back on meal, where it has traditionally rested. Meal had a good weak, following corn higher, so the best hope for crush to pick up is both a strong corn market and a strong energy complex. To read Bryce Knorr's complete weekly soybean review, click HERE.
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Tagged: usda, soybean, farm, wheat, farm futures
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