If you will recall, several months ago there was concern that a lack of 'credit' being made available to farmers was going to result in smaller harvests. This was the likely direct result of some farmers being unable to borrow sufficient funds (at an affordable interest rates) to fully plant this year's crops or to fund the use of fertilizers and pesticides at levels that will yield maximum crop production. Well, it appears that such concerns are turning out to be true. Southern hemisphere harvests are coming in well below expectations. As a result, global net buyers are scrambling to lay their hands on (what remains of) America's stored surplus of crops from last year's harvest.
(snip)"China chews through U.S. 'old-crop' soybeans
The U.S. 'old-crop' soybean plot could continue to thicken this summer, raising prices.
By Mike McGinnis
Agriculture Online Chicago Markets Bureau Chief
5/20/2009, 1:51 PM CDT
CHICAGO, Illinois (Agriculture Online)--The U.S. supply of 'old-crop' soybeans is projected to be the smallest ever this summer.
That is creating a run-up in CBOT soybean futures prices. The July CBOT soybean prices, at $11.85 per bushel, jumped 76 cents from Sunday night to Wednesday
The price surge is also sparking world buyers to secure supplies ahead of any demand-rationing.
A few well-respected U.S. trading firms this week estimated very tight old-crop soybean ending stock estimates. These estimates represent the 2009 soybean crop-year that ends August 31.
Most trade estimates for the U.S. old-crop soybean carryout on August 31, 2009, range between 60 and 80.0 million bushels, vs. the USDA's estimate of 130 million.
"An extraordinarily tight number by historical (or any) standards," says Vic Lespinasse, CBOT market analyst and floor trader with GrainAnalyst.com.
The U.S. domestic soybean meal crush runs about 120 million bushels per month between August and November. By November, crush is ramped up to 150 million bushels. "So, we're going to either run out or ration the crusher," the unnamed floor trader says.
HOW IT HAPPENED
The idea of tightening U.S. old crop soybean stocks has been around awhile. But, it's been a quick turnaround in perception, CBOT floor traders say.
The road to very tight supplies started with the Chinese government announcing it is procuring 7.0 million metric tons of soybeans for its state reserve.
On Wednesday, news reports indicated the Xinhua, the official Chinese news agency, says unnamed Chinese experts want the government to use some of its massive foreign currency reserves to build up a Chinese bean stockpile of 50 million metric tons. [I have been suspecting this for some time. China is buying up all domestic soybean productions, forcing their domestic crushers to import US soybeans. This reduces China’s trade deficit and accumulation of dollar reserves.]
Lespinasse says this is unimaginable and will not happen. "But it makes one wonder why Xinhua would even print such a story." [because it is obviously true. Or perhaps China’s soybean crop has been hurt worse by drought then they are willing to admit.]
China announced its stockpiling initiatives at a time when Argentina's 2009 soybean production, hurt by drought, was much worse than people thought."(snip)



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