Alex Bobrov
Unlike other grain crops, soybeans were declining in price during the last week. There was a number of reasons for that:
· The US export keeps shrinking, i.e. there is no demand for American soybeans because of a stronger US dollar
· The USDA’s report released on Nov 9th turned out to be favorable.
· The final forecast for the inventories and production of soybeans in 2011/12 were reconsidered in favor of an increase
· Positive news on the sowing campaign in Latin America also pressed the market
Let’s have a closer look at the USDA’s report. The global production is expected to reach 258,905mmt, which is 0.12% more than expected in October. The US production is expected to see a 0.38mmt decline while Argentina will gather 1mmt less. However, Brazil is expected to gather 1.5mmt more.
The situation around imports stayed the same while the US and Argentinean exports were lowered 1,3mmt and 1mmt correspondingly. Brazil’s export is believed to see a 1.5mmt increase. The global soybeans refining shrunk by 0.7mmt. Therefore, the report turned out to be bearish.
Speaking about Argentina and Brazil, it is necessary to mention that these two countries are planning to expand their sown areas of soybeans by 3,3% and 3,8% ( 25 and 19 million hectares) correspondingly.
The expected yield is 3 tons per hectare for Brazil and 2.74 tons per hectare for Argentina.
According to the Department of Commodity Trading, , soybeans prices will be under pressure. However, they will gain support if there are unfavorable weather conditions in South America as they may interrupt the sowing campaign.
Alex Bobrov
