(emphasis mine) [my comment]
Thursday, 25 March 2010
Acute Spot Soyameal Tightness
The acute tightness in nearby soymeal availability in the UK looks set to continue a while yet with GBP317/tonne traded for first half April ex Liverpool today. That's around GBP40/tonne higher than what was being offered at the beginning of the month.
A glance down the shippers price lists at the moment sees more POA's than actual firm prices, as spot demand remains strong and the supply pipeline acutely tight.
One of the problems is that many consumers appear to have put themselves in an underbought position, in anticipation of a glut of cheap soymeal flooding in from South America. [USDA to blame for thie "anticipation"]
Despite record production there, a combination of lack of farmer selling and bottlenecks at the ports is currently delaying arrivals in Europe by up to a month.
Nearby afloat vessels carrying Argentine hipro soya to Europe are quoted at USD424/tonne CIF today, whereas vessels only currently loading are offered at around USD366/tonne. [backwardation (immeadiately available commodities are worth more today than in the future. It is a sign of shortages).]
The situation looks set to get worse as Argentine dock workers flex their muscles by threatening widespread strike action, as they frequently do just as the soy and corn harvests kick off.
Strike action has already begun at the Quebraco terminal in the Argentine port of San Martin about 500 km north of Buenos Aires, and there are concerns that more ports will follow suit. In addition discontented truckers and farmers are now also threatening to follow suit.
Big crops, big prices is an old saying in the grain trade, and it certainly looks like applying to the current soymeal situation. A glance down one shipper's list today shows straight April hipro soya on the Humber priced at just shy of GBP75/tonne more than July.
This situation certainly looks like it is likely to continue at least through April and the into May - where domestic consumers here have substantially less cover on.
The Forex Yard reports that US soy, corn rally on short-covering, Argentina.
GRAINS-US soy, corn rally on short-covering, Argentina
Saturday March 27, 2010 06:46:21 PM GMT
By Julie Ingwersen
MARKETS-GRAINS/ (UPDATE 4)
* Soybeans climb 1 pct on short-covering, dollar weakness
* Strike at Argentine port adds support
* US wheat at five-month low on weak exports, big stocks
* USDA plantings report next week remains a focal point (Recasts, updates with closing U.S. prices)
CHICAGO, March 26 (Reuters) - U.S. soybean futures rose 1 percent on Friday as investors covered short positions the day after a steep, technical sell-off, and as news of a labor dispute at a port in Argentina raised hopes for U.S. soy exports.
The dollar fell versus the euro on news of a bailout deal for Greece, lending support to many commodities, including soy and corn.
A softer dollar makes U.S. products such as grains cheaper for holders of other currencies.
"I think it's the weaker dollar, and maybe ideas there could be some (soy) buyers coming to the United States," said Mario Balletto, an analyst with Citigroup in Chicago, referring to the soybean rally at the Chicago Board of Trade. [The cost of soybeans in China right now is $16.20 Chinese about 6.68 more than in the US. As long as that continues to hold true, Chinese soybean consumption will grow.]
CBOT corn closed modestly higher on short-covering, while wheat drifted to life-of-contract lows on continued pressure from burdensome global supplies.
In Argentina, protests by dockworkers prompted police to close a road leading to the port at San Martin, a key outlet for the world's No. 3 soybean exporter, and several terminals at the port were not receiving grains.
The dispute raised concerns about the ability of South America to deliver timely shipments of soybeans despite the expanding harvest of a likely record-large harvest.
"Soymeal is relatively tight in Europe. They are waiting for the South American crop to come, and the shutdown of the Argentine port probably affects them more than it does us," said Roy Huckabay with the Linn Group, a Chicago brokerage.
Tight U.S. cash markets for soybeans and soymeal added support, prompting bull-spreading by CBOT traders who bought nearby May and July futures in both commodities while selling the deferred contracts.
My reaction: Because of ever increasing crop estimates, everyone has pilled onto one side of the market: the short side. End-users are underbought, and speculators/exporters/farmers are oversold.
Desperate end-users now chasing the market
Business Week reports that soybeans, corn rise on Argentina, crop damage, and improved demand.
Soybeans, Corn Rise on Argentina Crop Damage, Improved Demand
March 03, 2010, 12:10 PM EST
By Jeff Wilson
March 3 (Bloomberg) -- Soybeans gained for a fourth session and corn rose on concern that unusually heavy rain will damage crops in Argentina as the global recovery improves demand for food, animal feed and biofuel.
Some fields in Argentina received more than 5 inches (13 centimeters) of rain in the past 24 hours, causing localized flooding and reducing yield prospects, T-Storm Weather said today in a note to clients. The dollar fell the most in two weeks and the MSCI World Index rose for a fourth session on speculation that measures in Greece to curb a budget deficit will bolster confidence in the global recovery.
"It's a combination of unfavorable weather, a weaker dollar and improving world stock markets," said Doug Bergman, a grain broker for Advantage Traders Group in Chicago. "There are a lot of end-users hoping to get corn and soybeans bought at lower prices and are now chasing the market." [Translation: because of the USDA's faulty estimates end-users (soybean crushers, exporters, etc) have been waiting for the promised drop in price (a drop under $9 per bushel would already have happened if USDA estimates were true.]
This cash buying is driving prices up
Tradingcharts reports that spot soybean prices are rising.
DJ US Cash Grain Outlook: Spot Soybean Prices Test One-Month High
Mar 24, 2010 (Dow Jones Commodities News via Comtex) -- By Gary Wulf
Of DOW JONES NEWSWIRES
Farmgate soybean prices continued to challenge one-month highs, even as elevator bids for other major classes of U.S. cash grain languished at one- to seven-week lows Wednesday. Domestic basis remains generally firm, again this week.
Grassroots soybean markets have steadily risen by almost 4 cents per day, during the past week and a half, adding a total of 42 cents to cash prices since March 11.
"The good news for growers is that old-crop demand has not dried up. The U.S. continues to sell 2009 crop beans; China isn't taking much any more, but other buyers that have sat on their hands all winter are now stepping forward," said Farm Futures analyst Bryce Knorr. "My forecasting model continues to show tightening old-crop stocks, with exports/crush both better than USDA's (U.S. Department of Agriculture) forecasts." [Agreed]
Strong Soybean demand
Agrimoney reports that fears for slump in soybean crush 'may be overdone'.
:30 UK, 23rd March 2010, by Agrimoney.com
Fears for slump in soybean crush 'may be overdone'
Analysts forecasting a steep slide in the US soybean crush over the next six months may be overstating their case, to judge by historical patterns, a leading farm economist has said.
While America's soybean crushers are typically busier in the first half of the crop's marketing years, which begin in September, than in the second half, the difference is not pronounced, University of Illinois academic Darrel Good said.
Over the last decade, the weighting towards September-to-February periods has kept in a "narrow range" around 51.7%.
And during years with large crops, as in 2009-10, there is a "slight tendency" for the weighting to be smaller, Mr Good said in comments which follow
warnings [wishful thinking] from a range of forecasters - including the US Department of Agriculture - of a steeper-than-normal tail-off in crushing activity over the next few months,
Stocks estimate to be cut?
"If the domestic crush is following an average large crop pattern, the crush during the first half of the marketing year points to a [2009-10] total of 1.84bn bushels," Mr Good said. [1.84 billion bushels = 50 million metric tons]
US soybean dynamics, 2009-10 (year-on-year change)
Sowings: 77.5m acres (+2.4%)
Production: 3.359bn bushels (+13.2%)
Domestic crush: 1.73bn bushels (+41%)
Exports: 1.42bn bushels (+10.7%)
Year-end stocks: 190m bushels (+38%)
"That is 110m bushels above the US Department of Agriculture's current projection." [110 million bushels = 2.7 million metric tons]
The data comes amid growing expectations that the USDA will lower again, from 190m bushels, its forecast for America's soybean inventories at the end of the marketing year.
My reaction: The USDA is desperately fanning fears of slump. The soybean market as a whole is critically underbought and oversold, and unwinding this position is going to require massive buying on the cash/spot market (soybean exports buying to meet export commitments and soybean crusher buying to replenish empty inventories) which would send prices soaring, completely discredit the USDA, and create a justified panic about securing scarce food supplies.
To delay this unwind for as long as possible (until shortages push cash prices up over the next few weeks), the USDA is doing everything in its power to keep the market in a perpetual state of fear about an imminent collapse in soybean prices (this perpetual state of fear has alread y been maintained since last June)
Agrimoney reports that US soybean stocks cushion 'unusually thin'.
21:32 UK, 16th March 2010, by Agrimoney.com
US soybean stocks cushion 'unusually thin'
The US soybean market has an "unusually thin" cushion to absorb supply shocks, such as a failed harvest this year, Oil World has said, in a note estimating that inventories have slumped by 40% in three months.
The oilseeds analysis group forecast US soybean stocks beginning this month at 35.63m tonnes (1.31bn bushels), cutting 670,000 tonnes from its previous estimate.
The figure would represent a fall of 28m tonnes, or more than 1bn bushels, since the start of December.
It would leave the US with little scope for meeting demand, which at a global level averages about 20m tonnes a month, should the pipeline from Argentina or Brazil rupture, or this year's US harvest struggle.
"The safety net to cushion any supply disruptions in South America or crop problems in the US this summer is thus unusually thin," the group said.
My reaction: below is a graphic showing how out of balance the US soybean market is.
Soybeans are going up, not down
Inside Futures reports that soybean fundamentals.
Soybean Fundamentals ... Bullish or Bearish?
Thursday, March 25, 2010
The U.S. soybean producer raised a record large soybean crop last year, reaping just over 3.3 billion bushels for a national average yield of 44 bushels per acre [no they didn't.]. With the exception of the wet spring and late planting dates, the weather during the growing season was ideal [It was the worst harvest season ever seen]. Wet conditions during fall harvest presented some challenges and delayed total harvest progress, but once in the bin the crop was measured as record large. On top of the record large U.S. soybean crop, production in South America is also expected to be record large. Producers in Brazil and Argentina are currently in the middle of their harvest. Thus, from a supply standpoint, the soybean fundamentals are clearly bearish [IF you believe USDA estimates]. Many, if not nearly all grain analysts , who typically focus on the supply side of the equation, are bearish toward soybean prices and have encouraged U.S. producers to sell their crop accordingly. Many farm advisors have recommended selling all old crop soybean production as well as selling a portion, in some cases, a large portion of expected new crop production. This type of advice and attitude would lead one to believe that soybean prices are locked into a spiraling downtrend [which is what the USDA desperately want you to believe]. A look at the May and July soybean chart indicates, perhaps, just the opposite; soybeans appear to be in an uptrend??? [really? That is because they ARE in an uptrend.]
Chart provided by APEX
The reason that old crop soybeans are not working lower is the fact that demand for U.S. soybeans has never been larger. Currently the USDA is projecting total soybean use for this crop at 3.3 billion bushels, or nearly evenly matched up with this year's [supposed] production. Both exports and crush are projected to be up substantially from last year. The latest USDA supply/demand table is projecting soybean ending stocks for this year at 190 million bushels. Historically, this is not a large ending stock figure and when put in terms of ending stocks versus usage, the stocks to use ratio at 5.7% is historically very tight. Last year soybean ending stocks were very small (138 million bushels) resulting in a stocks to usage ratio of 4.5%. Typically, the function of the market in periods of tight supply is to drive prices higher to a level that slows demand, or rations tight supplies. It appears we never reached that price level last year, as the demand for soybeans continues to increase.
Sometimes I find it helpful to look at the market from a different perspective, perhaps, than the rest of the crowd. As indicated above, the supply side analyst is clearly bearish toward soybean prices. However, in terms of "known fundamentals" versus "unknown fundamentals" the supply side of the soybean market is widely known and has been known for several weeks, if not a couple of months. However, the real "unknown" fundamental lies in the seemingly insatiable demand for soybeans. Last summer soybean prices spent much of the summer in the $10.00 to $12.00/bushel price range, yet the demand for soybeans continues to increase. If that's the case, then I suspect prices in the recent $910 to $980 range are not going to slow down soybean demand. Moving forward, it is the demand for soybeans that is the widely unknown variable.
I can't help but recall a painful lesson from last summer's soybean market [trusting the USDA must be a painful experience indeed]. Prices had been working lower as it became fully evident the U.S. was likely to produce a successful soybean crop. Typically the market is solely focused upon supply during the growing season. With acreage known and good growing weather underway and the crop developing nicely, I thought positioning from the short side was the correct strategy, despite tight ending stocks. Suddenly and without warning, at the end of July soybean prices rallied sharply as it became evident that China was aggressively purchasing U.S. soybeans despite all of the above mentioned supply fundamentals. The fact is, the demand for soybeans continues to increase approaching our growing season. The latest information confirms this statement. The crush rate for February was just pegged at 153.8 million bushels compared to 135.4 million crushed in February of 2009. Recently the Chinese Commerce Ministry revised upward their soybean import projection for March by 17%. It appears they will import 4.56 million tons of soybeans this month, up from the previous projection of 3.3 million and well above the year ago import figure of 3.86 million tons. If accurate, this would be the third largest monthly import total on record for China and will come in just below the December record figure of 4.78. Making the assumption that the U. S. economy as well as the global economy is on the mend and starting to expand, my conclusion is that soybean demand will continue to increase into next year.
My approach to the soybean market, for my producer clients, is the following strategy. When you need to move cash soybeans for cash flow purposes or to avoid additional storage costs, do so but then consider replacing your ownership, or part of your ownership with bull call spreads in the July soybean options. I'm usually not comfortable "running with the crowd," especially when I believe the crowd is incorrect. Approaching the growing season in which the variables of acreage, weather pattern and yield/production are all unknown, I have not recommended any new crop hedges. I'm quite surprised at how bearish most farm advisors are this winter.
For my speculator clients, my advice is straight forward. Establish bullish positions in the options market [I would advise everyone to stay away from all derivatives, especially options. See next article], anticipating a possible upside breakout approaching the growing season [it is going to be one hell of a breakout]. My clients are currently holding bull call spreads in the May soybean options. May soybean options expire on April 23rd, or 29 days from the date of this report. For traders reading this report and looking to add to or establish a bullish position in soybeans, consider purchasing the May soybean 960 calls at 15 cents or less. This represents a premium outlay of $750 per call, giving you the right to be long May soybeans at $960. A close in the May soybean contract above $980 would represent an upside breakout giving me an upside target at $1040.
High inflation makes operating a futures market impossible
DTN Progressive Farmer reports about big crop and small profits in Mato Grosso.
Friday Mar 26, 2010
Big Crop, Small Profits In Mato Grosso
by Kieran Gartlan
Despite record soybean production this season, it could still be the worst year in terms of profit since 2003 for many farmers in Brazil's top soybean producing state of Mato Grosso.
While the state is expected to produce around 18 million metric tons of soybeans this season, up from 17.4 mmt, last season, this has come as a result of higher planted area, rather than higher yields.
According to Carlos Favaro, a director at the Mato Grosso soybean producers association known as Aprosoja, planted area is 7 percent higher this season, while yields could be 10 to 15 percent lower - the worst in over four years.
Wet conditions have increased pressure from Asian rust disease this season - resulting in higher costs - while excess rain has affected fieldwork and bean quality.
According to Favaro, under current market conditions farmers would need to produce over 45 bushels an acre to make a profit, while the state's average yield is likely to be around 42 bu/acre.
Local soybean prices have fallen over 30 percent since December, while only around 50 percent of the state's crop has been sold so far. Current farmgate prices are under $6.00/bu.
Local consultant Antonio Bueno, says it's difficult for farmers to hedge beans in Brazil because of a lack of cash flow and financing for margin calls, as well as a lack of knowledge on how the futures and options market work.
Futures markets are still a relative novelty for Brazilian farmers, mainly due to the country's past economic volatility. In times of high inflation it is impossible to operate a futures market. [KEY POINT.]
Brazil's inflation is now under control, at around 5 percent a year, and has been stable since the country's economic plan known as the Plano Real was introduced in 1994.
However, soybean and corn contracts on the local futures market, known as BM&fBovespa;, are still very illiquid. A small number of farmers operate on the Chicago Board of Trade, but this requires that they also hedge against exchange rate and basis risk. [exchange risk refers to threats to the dollar's value, and basis risk refers to the danger of sharp backwardation (where cash prices start trading at a high premium to fut ure prices]
My reaction: If you hadn't noticed from a quick glance at the Federal Reserve's balance sheet, we are headed towards a period of high inflation, and high inflation leads to the collapse of any futures markets (shorts get crushed, go broke, and default).
The Shrinking South American Crop
Respected private consultant Kory Melby coverers agricultural developments in South America on his blog.
Ag Blog News
March Agenda - ARG Beans
27 Feb - Saturday
Last week I sent out a special update to subscribers regarding the interior Brazilian soybean producer dilemma. The cost of freight and lack of storage has put pressure on cash soybean prices making it difficult to cash flow.
I have a soybean buying delegation coming from China starting March 13th.
I will be very busy with their tour.
I will be gaining much info in the coming weeks and will have a better feel for 2011 crop after the upcoming tours.
For now, I expect Brazil's soybean crop to shrink a little.
Sources from Argentina tell me the crop is fantastic.
I am still hesitant to believe production will be much above 50 MMT for ARG.
Brazil 64.5 MMT ARG 50.0 MMT Paraguay 6.5 MMT
USDA February estimates:
Brazil 66.0 MMT ARG 53.0 MMT Paraguay 7.0 MMT
02 Mar - Tues
Uberl—ndia producers are talking 10-15% yield losses from expectations. Still 50 sacs but not 60. Too much heat in early February nipped yields in some areas of Brazil on certain % of crop. Brazil soy crop size is shrinking. Subscribers received special update March 2.
USDA March estimates: (brazil crop got bigger)
Brazil 67.0 MMT ARG 53.0 MMT Paraguay 7.0 MMT
11 Mar - Thu
I am headed to Cuiabá, MT on Saturday. I will meet my China soybean buying delegation.
I plan to take them to Lucas do Rio Verde, Mato Grosso before we fly to Săo Paulo.
On Monday March 15 five state governors will descend on Lucas do Rio Verde to announce the new railroad project. 2010 is an election year so many projects will be announced.
Highways, rail, fertilizer mines, oil wells, and big crops that show "Progress" will be in the media.
With the low dollar and expensive freight rates, the new railroad is mandatory to keep central Mato Grosso viable as a production center. I hope they can survive until the railroad arrives.
Many of the experts have announced 67 MMT ton Brazil soybean crop. I do not believe it is that large. The perception of a 130 million ton SA crop is in the market place. I am impressed at how well soybean prices have held up considering the bearish news. I would have thought soybeans to be 8 bucks in Chicago by now. Any news items from experts that they are cutting their Brazil crop size should be bullish going forward. Brazil soybean farmers have been reluctant sellers. I don't know how long they can wait.
On Tour: Update From Mato Grosso
18 Mar - Thu
Mato Grosso soybean prices are down on 23 reais per sac. Farmers want and need 28 reais per sac.
Elevators are full. 60-70% of soy crop has been sold. We need to keep in mind that 10 million tons of Mato Grosso 18 million ton crop is processed within the state.
Farmers have taken their truck assembly sheets to the bank, where they have taken out loans on their soybeans in storage. In theory these soybeans can sit in storage for 6 months.
This is driving elevator managers crazy. 2nd crop corn will be ready by the end of May. No place to put it???? Many have last years corn on hand yet.
It will take some incentive to get beans to port. Crusher bids look good compared to paying US$ 120 a ton to port. [$ 3.27 a bushel to port]
Mato Grosso is reporting that 98% of the soybeans have been harvested
26 Mar - Fri
My guess is that Mato Grosso produced 18- 18.25 million tons. This is much less than earlier projections as high as 19 MMT.
It is only a matter of time before we hear talk of a smaller soybean crop in Brazil.
This should be supportive to prices unless USDA shocks us on March 31 with a big bean number for USA in 2010. [100% guarantee that "USDA shocks us on March 31 with a big bean number for USA in 2010"]
I will be posting the new forecasts on the site as they come to light.
DpPFogressive farmer reports that conab raises brazil crop outlook, (while others lower their espimates).
Tuesday Mar 9, 2010
Conab Raises Brazil Crop Outlook
Brazil's crop supply agency, known as Conab, has raised its outlook for this season's soybean crop to 66.7 million metric tons (mmt), 18 percent higher than last season's production of 57.1 mmt.
The estimate is 1 mmt higher than last month's forecast, with harvesting now one third complete, and comes as a surprise given less than perfect conditions over recent weeks and reports of lower than expected yields in many regions.
In Mato Grosso, the country's top soybean producer with nearly one third of national production, yields have been disappointing in recent weeks, especially in the west of the state, due to excess rain and pressure from Asian rust.
The Mato Grosso agricultural research institute, known as Imea, has already lowered estimates for this season's crop by around 1 mmt to 18 mmt in recent weeks, but Conab sees the state producing 19 mmt.
There are also reports of problems in Goias, where Asian rust has been especially aggressive this season, and in parts of Parana and Mato Grosso do Sul, where the crop has suffered from high temperatures and several weeks without rain in January and early February.
Most private analysts have pegged this season's crop at between 65 mmt and 66 mmt, and given forecasts for continued rain over coming months, this seems a safer bet than Conab's latest figure.
The USDA is due to release its monthly WASDE report tomorrow and it will be interesting to see if it raises it current estimate for Brazil from 66 mmt. I expect it will be unchanged. [Again, the USDA raised its estimate to 67 MMT (they need to keep the fear of price collapse alive with ever more insane estimates.)]
The Chinese wheat imports 'mystery'
Agrimoney reports that the rise in China wheat imports revives data 'mystery'.
13:04 UK, 18th March 2010, by Agrimoney.com
Rise in China wheat imports revives data 'mystery'
China has jumped up the league of buyers of Australian wheat, despite an apparently large domestic harvest, putting the "mystery" surrounding Beijing crop data back to the fore.
More than 400,000 tonnes of Australian wheat are expected to have been shipped to China between the start of November and the end of this month, grain handler CBH Group said.
The figure is higher than that for the whole of 2008-09, and could reach 700,000 tonnes by the end of 2009-10, CBH, Australia's biggest wheat exporter, said.
China has also raised shipments from many other countries — imports from America have tripled to 128,200 tonnes since July — raising questions among analysts, when the country already appears to have abundant domestic stocks.
With China already the world's biggest importer of soybeans, is the country "now also gaining influence on the world wheat market?" Commerbank asked.
The German bank said that, for now, the answer was "no", attributing wheat import growth to a desire to build stockpiles, rather than to fix a supply shortage which might herald a more lasting presence in the import markets.
China, the world's biggest wheat producing country, enjoyed a bumper harvest of 114.5m tonnes last year, more than 10m tonnes ahead of demand forecast for 2009-10, according to US Department of Agriculture estimates, which are based largely on official statistics.
'Always a mystery'
However, USDA staff have issued a series of warnings over the reliability of official Chinese crop data, saying that a subsidy system based on production encourages regional authorities to exaggerate harvest figures.
Chinese wheat dynamics, 2009-10 (annual change) according to USDA
Production: 114.5m tonnes (+1.8%)
Imports: 800,000 tonnes (+67%)
Use: 103.0m tonnes (+0.5%)
Year-end stocks: 60.0m tonnes (+23%)
Tom Puddy, marketing chief at CBH's GrainPool marketing arm, said: "It is always a mystery about what [China's] actual stocks are."
According to the USDA, China will end 2009-10 with inventories of 60m tonnes, up 23% year on year, and sufficient supplies to last seven months. The figure assumes global imports of 800,000 tonnes.
India, which is also sitting on huge wheat stockpiles, also bought a small quantity of Australian wheat last year because of its lower price, with the domestic market supported by a generous farm support programme.
The true behind the Chinese wheat imports 'mystery'
Nogger reports that the Chinese are Lying About Crop Production.
Thursday, 4 March 2010
Chinese Lying About Crop Production Shocker
Just like jeans, bacon butties and hairy gay men with huge moustaches, some things never go out of fashion. Cue China and it's crop estimates, I use the word 'estimates' in it's l oosest form obviously.
A report from the US agricultural attaché in China says that the 2009/10 wheat crop there was in fact 106 MMT, substantially less than the 114.5 MMT that official Chinese figures currently suggest. That's a 7.5% overestimate.
The widely reported early season drought took it's toll last season, as too did disease, hot and dry winds and rain damage at harvest time, he says.
The corn crop too was also badly affected by drought, coming in at 150 MMT which is some 13 MMT below official Chinese estimates, he adds.
The problem stems from the state subsidy program that rewards provincial government authorities based on the volume of grain that they produce.
Assuming that the figures are correct, and there have been plenty doubting the official numbers for many months, that immediately knocks 4.3% off global wheat ending stocks for 2009/10. And that assumes that previous year's 'estimates' weren't also falsified.
It's no huge surprise let's face it, but it does put things into perspective when you consider that China are supposed to account for almost a third of the world's wheat stocks this year. Or are you going to tell me that this is the first time they've done it? If they've overestimated production by 7.5% for the last eight years then China's 60 MMT of 2009/10 ending stocks simply doesn't exist.
Now that's food for thought, or not as the case may be.
My reaction: At this point, please remember the entry I made a few days ago about *****THE TRUTH ABOUT INDIA'S WHEAT RESERVES*****. It appears that most of the wheat in the three largest reserves (China, India, and the US) is not there.
Conclusion: Everything is set for the *****2010 Food Crisis for Dummies*****. What is going to happen next is simple:
A) prices are going to rise slowly driven by growing shortages
B) The fear of price collapse in soybeans will fade away as the doubts about the USDA grow (ie: "if the USDA's numbers are right, why are prices still going up?"). As end-users try to get out of their underbought and oversold positions, the price rises will accelerate.
C) Panic explodes as faith in USDA numbers collapse. Everyone becomes a spot buyer.