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South American Competition

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Mike

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Lagging exports add to soybean stocks, weigh on prices

Jan 24, 2006 9:41 AM

By Elton Robinson

USDA’s January assessment of the 2005 season and supply/demand estimates for the 2005-06 marketing year includes higher production for corn and soybeans, weakening exports for soybeans and higher ending stocks than last month’s projections for both crops.

The January crop production report estimated 2005 soybean production at 3.09 billion bushels, up from last month’s total of 3.04 billion bushels and down from last year’s total of 3.12 billion bushels. The corn crop was estimated at 11.11 million bushels, up from last month’s 11.03 billion bushels and down from last year’s estimate of 11.81 billion bushels.

Soybean ending stocks were estimated at a surprising 505 million bushels, up from last month’s 405 million bushels. Corn ending stocks were estimated at 2.43 billion bushels, up from last month’s 2.42 billion bushels. Wheat ending stocks were estimated at 542 million bushels, up from last month’s estimate of 530 million bushels.

According to Jack Scoville, vice president, Price Futures Group, the production estimates were in line with trade expectations, “but the real issue was what happened on the demand side of the ledger. USDA didn’t find a lot of new demand, so ending stocks estimates were as high as or higher than trade projections. The number that sticks out are ending stocks for soybeans, at 507 million bushels.”

Speaking at a Chicago Board of Trade press briefing, Jan. 12, Scoville noted, “It really points out that we have a lot of competition from South America for soybeans. In addition, USDA increased production in South America by about a million tons, despite some dry weather down there. There is going to be plenty of supply to meet any level of demand around the world. There is nothing really for the bull to hang his hat on.
 

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