World Grain - November 2010 - 21

GRAINMARKETREVIEW
Cash soybean prices
(in $1 per bushel)

Oilseeds
China continues to buy
soybeans at a torrid pace

10
8
6
4
2

by Chris Lyddon
0

Prices received by U.S. farmers
Source: U.S. Department of Agriculture

Brazilian soybean situation
(in 1,000 tonnes)

80,000
Exports
Processing
Production

70,000
60,000
50,000
40,000
30,000
20,000
10,000

2010-11*

2009-10

2008-09

2007-08

2006-07

2005-06

2004-05

2003-04

2002-03

Aug
July
June
May
April
Mar
Feb
2010 Jan
Dec
Nov
Oct
Sep
Aug
July
June
May
Apr
Mar
Feb
2009 Jan

Massive demand from China is keeping oilseeds markets buoyant.
At this point in the year, all eyes are on the soybean crops in the
United States and South America. Europe's rapeseed crop fell to 19.9
million tonnes from 21.5 million the previous year, Russian oilseed
production is suffering from drought and Australia's crop is also
plagued by weather problems.
Despite these problems, the International Grains Council's (IGC)
2010-11 production forecast of 260 million tonnes beats last year's
record.
The U.S. crop is slated to be a record at 94.8 million tonnes, compared with 91.4 million the year before. "However, the global outlook
is still tentative as much depends on outcomes in South America,
where harvesting will not commence until early 2011," the IGC said.
"Argentina, Brazil and Paraguay brought in record crops earlier this
year, and while there is expected to be heightened competition from
other crops, particularly maize, very good outturns are still likely if
growing conditions are generally favorable."
The IGC expects China to import 53.5 million tonnes of soybeans
in 2010-11, up from 49 million in 2009-10.
More bearish factors are weaker crude oil and a touch of profit
taking in markets around the world as traders take a breather and
think about where the market might be going next. A USDA report
which put stocks higher than expected also caused market players to
stop and think.
Even so, according to the CME Group's own commentary, November soybeans had, at the time of writing, just posted a two-year
high. On the same day, the dollar posted a low, providing an added
bullish element. The USDA's Grain Stocks report showed a 9% rise
in U.S. soybean stocks, although the more immediate market response was to a 2% rise in maize (corn) stocks.
As of Oct. 7, cumulative soybean sales stood at 56.4% of the
USDA forecast for 2010-11 versus a five-year average of 38.6%, the
commentary said.
A look at the USDA's releases for the first half of October shows
how soybean sales to China are going. On Oct. 15, exporters reported
240,000 tonnes of soybeans exported to China, 280,000 tonnes on Oct.
14, 297,500 tonnes on Oct. 13, 225,000 tonnes on Oct. 5 and 110,497
on Oct. 1. Deals under 100,000 tonnes don't have to be reported.
One country which has problems is Australia. Water logging in
Victoria and drought in Western Australia has triggered a cut in the
Australian Oilseeds Federation's crop estimate by 185,000 tonnes to
2.065 million tonnes, still up from 1.897 million last year. The reason
the crop total is up is a rise in planted area, to 1.61 million hectares from 1.39 million, and a sharp increase in yields in New South
Wales, where the 2010-11 crop is put at 605,000 tonnes, compared

* Forecast
Source: Brazilian Association of Vegetable Oil Industries

with 261,000 last year on an area which has risen to 320,000 hectares
from 227,000. Recent dry weather in NSW has been welcome, the
federation said in its commentary on the new estimates. Dry weather
in Victoria has been too late to save crops in the high rainfall zone of
the state's western district.
According to the U.K.'s Homegrown Cereals Authority, Argentina
has started planting soybeans, with 1.3% of the area completed by
Oct. 7. Damp soil in Argentina is reported to be aiding planting.
According to the USDA attaché in Brazil, where planting has also
begun, the planted area there will be a record 24 million hectares.
The USDA maintains its forecast of a record 67.5-million-tonne Brazilian crop.
"The La Nina weather phenomenon slightly delayed planting and
is expected to reduce national average yields due to irregular precipitation patterns," it said in a recent report. "Favorable futures prices
have spurred early committed sales of the 2010-11 soybean crop to
18%, ahead of historical norms."
We want to hear from you - Send comments and inquiries to worldgrain@sosland.
com. For reprints of WG articles, e-mail reprints@sosland.com.

November 2010 / World Grain / www.World-Grain.com

http://www.World-Grain.com

World Grain - November 2010

Table of Contents for the Digital Edition of World Grain - November 2010