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Latest USDA Numbers Friendly to Beans

posted on March 11, 2005


Chinese demand is driving ocean freight rates higher again, but also providing higher premiums on dry bulk shipments like soybeans.

China is the world's largest soybean buyer, and analysts say the Chinese were caught off-guard by the recent spike in soybean prices. As the price of the commodity and the cost to ship it continue to rise, Asian buyers sit and hope for a price correction.

But that scenario seems unlikely, based on USDA numbers this week which were friendly to the soybean market.

Latest USDA Numbers Friendly to Beans Traders in the soybean pits found much to their liking in the USDA numbers.

Analysts trimmed world soybean production and ending stocks for the 2004-2005 crop year. A reduction in the estimated size of the Brazilian crop accounted for the drop of four million metric tons in world production. Domestic stocks were cut to 410 million bushels, thanks largely to an expected increase in soybean exports.

The upshot is renewed support for soybean prices, a fact not lost on commercial traders looking for the next bull market.

The numbers were NOT as optimistic for grains, especially corn. World ending stocks for corn were boosted by nearly five million metric tons. U.S. ending stocks also were raised on anticipated lower exports.

In wheat, a projected increase in exports was offset by an estimated decrease in food use. That left U.S. ending stocks reduced by just five million bushels, a number seen by the trade as mostly neutral.


Tags: agriculture corn crops government markets news trade USDA