USDA supply and demand report suggests soyabean rally is about to be blocked

(agricultural Wealth Network)

On November 10, the United States Department of Agriculture released the November supply and demand forecast report, which exceeded market expectations in terms of the increase in soybean production per unit area, stocks in the United States, and total soybean production in South America, while world soybean stocks continued to recover. The reported data are more bearish to the market than expected, although prices do not react too weakly, but such data pressure will show on the disk sooner or later. Let's analyze the data in detail:

The level of soybean yield per unit area and total yield in the United States exceeded expectations and reached an all-time high:

Before the data were released, analysts on average expected the yield of US beans to rise only slightly to 42.7bushels per acre, mainly because of concerns that frost in the United States and weather in Rain Water had delayed the harvest. in particular, rains in the delta in early November have led to widespread expectations that soybean quality has been damaged. But this is not the case, and the final figures show that the yield per unit area of American beans reached an all-time high of 43.3 bushels per acre. Under such a high level of per unit yield, the total output of Meidou also reached a record high, reaching a level of more than 90 million tons. In view of this, the hype about the harvest of American beans due to weather delays should come to an end, and the market will soon return to loose fundamentals.

South American production continues to rise to help world soybean stocks recover:

This month's report showed that Argentine soybean production in 2009 increased sharply to 53 million tons from 32 million tons in 2008, up 500000 tons from last month's report. Brazilian soybean production in 2009 and 2010 was raised to 63 million tons, compared with 57 million tons in 2008 and 62 million tons last month. Brazil and Argentina, two major producing countries, are currently in the early stages of sowing, and the recovery of yield estimates has helped the world's soybean carry-over stocks to increase significantly from the lower levels in 2008 and 2009. there are current expectations that the climate will enter El Nino. in that case, it will bring abundant Rain Water to the southern hemisphere and contribute to the increase in South American production, perhaps before the South American harvest begins in March or April next year. The USDA reports that it will continue to increase production in South America, so world soybean stocks will continue to recover amid a bumper harvest of American beans. And we tracked the annual carry-over inventory data of the world's three major oil varieties, soybean oil, palm olive oil and rapeseed oil, and found that after the adjustment reported by the Ministry of Agriculture this month, the inventory level of the world's three major vegetable oils returned to an all-time high, which is also a negative pressure worth noting in the later stage.

China has a large stock of soybeans, which needs to be vacated by new measures in the later stage.

According to the November supply and demand report of USDA, the carry-over inventory of soybean stocks in 2009 increased to 8.88 million tons from 8.14 million tons last month. A large number of imported soybeans (the latest data has reached 40.5 million tons) and the price increase of the State Reserve have led to the recovery of soybean stocks in the last two years. Since July 23, a total of 16 auctions of stored soybeans have been held in China, with a total planned auction of 7.5106 million tons, but the actual turnover is only 113858 tons, with an average transaction rate of 1.46%. The auction effect is very poor. When the new beans are about to be put on the market, there are still 7 million tons of temporary inventory to be digested. Chen Dou occupies inventory, is bound to dump Chen Dou to meet the collection and storage of new beans, soybean prices will be suppressed to a certain extent.

At a symposium on subsidies for oil factories held in Harbin on November 9, the target of 1.95 million tons of soybeans transferred by the State Reserve was confirmed, including 1.5 million tons in Heilongjiang, 150000 tons in Inner Mongolia, 250000 tons in Jilin and 50, 000 tons in Liaoning. At present, some enterprises in Jilin have started to use some of the indicators, while oil factories in Heilongjiang can withdraw their warehouses one after another this week, and a total of 47 enterprises are eligible for subsidies. At present, Heilongjiang oil plants have begun to lower their quotations, waiting for the country to store beans to extract oil.

We can see from the above analysis that the November monthly supply and demand report is bearish for both the United States, South America and China, suggesting that the supply-and demand-side easing pattern continues. At present, both Meidou and Lian Dou are resisting the bearishness of this report, mainly using the weak US dollar and the strength of crude oil, but once the market turns its attention to the sowing of South America and the dumping of reserves in China, the bearish fundamentals will once again take the lead, so the message from this report is that the soyabean rally is about to be blocked and will be pulled back to find the lower edge of the shock range.