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Tight Soy Supplies Rule Markets

posted on July 9, 2004

Working with one eye on next Monday's supply and demand report, traders this week pondered old-crop stochastics. That's especially true in the soybean pit, where old-crop soybean crush is being whipped by strong domestic demand. Processors seeking those beans to crush before next fall's expected big harvest have but one philosophy on which to operate  rationing.

Tight Soy Supplies Rule Markets USDA's June 1st inventory of soybean supplies showed the smallest level since 1977. Soybean stocks stood at 409 million bushels, with another 110 million bushels stored on farms. That's 27 percent below last year's totals at this same time.

A combination of rising export demand and strong domestic usage will keep those supplies tight through harvest. Domestic livestock needs alone will require some 70 million bushels each month.

Experts say farmers in the South who planted early variety soybeans this year could reap a price premium if they harvest in advance of their Midwestern counterparts. A check of midweek futures prices at the Chicago Board of Trade bears that out. The August contract closed Thursday at $8.13, compared to the November close of $6.53.

Some traders speculate August and September stocks will be so tight that soybeans actually will be shipped upriver to Midwestern processors.

Tags: agriculture crops markets news USDA