CBOT : Soybean Outlook Nov 9-13,2009

Last week CBOT soybean prices had pressure from expansion of US harvest. Soybean harvest pick up significantly to 51% at Nov 1 reported by USDA and expected increase to 70-75% in this week. Tomorrow(Nov 10) USDA will release US crop production and world supply& demand (link to report here) , soybean production expected to be a largest on the record. The average analysis estimated was 3.292 billion bushels from USDA's October forecast at 3.250 billion bushels.


There's not only US will get a big soybean crop, Brazil's soybean production will be a record too. CONAB (the Brazil National Supply Crop.) was estimated Brazil soybean crop at 62.5-63.6 million tonnes, compared with the range of 62.26 - 63.27 million estimated in October. Brazilian's farmers shift area to soybean planting because of attractive international prices and lower production cost and they rush to plant early soy crop for early harvest on Jan to Feb 2010, target to receive high premium. Planting area for Brazil's soybean was estimated range at 22.35-22.75 million hectares, up from 21.73 million last year. The Brazil's weather forecasts show above average rains which will benefit for soybean production.

CONAB said "Weather forecasts for the next three month show above average rains which will benefit crops"
picture from Qtweather

Oil world said "With favorable weather, the total Brazil soybean crop could exceed the last CONAB estimated by around 1 million tones."

The US and World production are a bearish factor as same as good US harvest. but there is some bullish factor that would support soybean price in this week due to the following factors.


The US export soybean will increasing sharply after Nov because some shipment were delay from Oct to Nov due to lack of soybean. But in Nov , harvest will develop and soybean coming out to serve export demand. Last week US soybean export inspection in weekend of Oct 29 were increase to 63.7 million tonnes with 40.1 million bushels to China and cumulative shipment from Sept 1 were 218 million bushels( up 11% yoy). China still biggest buyer of US soybean.


Decline of Argentina soybean production, In Argentina the drought has effected 12-15 million hectares of agriculture production. Rainfall during Oct was below normal in major Argentina soybean growing area, the Buenos Aires was 53% below normal, Cordoba 31%, Santa Fe 50%, Entre Rios 73% and La Pampa 16%. Dryness condition lead to delayed planting, as of Nov 4 Argentina soybean planting was only 12% compared with 30% in 2008 and 32% in 2007 (same time).

Oil world said " Unless the moisture situation improves noticeably in the next two weeks, Argentina soybean plantings and production will fall short of earlier expectations." Oilworld expectation 50 million tonnes and USDA expected 52 million tonnes in Oct estimated.

picture from Qtweather

The another bullish factor is Outside market support from weakness dollar, higher crude oil and gold prices. Major trend of USD index was bearish. The US unemployment rate is surprisingly high at 10.2% that keep FED rate steady at 0-0.25% for an extend period. Investor will looking for higher return and pour money to commodity. Oil and gold would keep rallies from money flow and also that money will flow in to CBOT grain.This week soybean, corn and wheat have support from weaker dollar and fund buying.