The Tuesday USDA report surprised many with an increase in world bean stocks, making levels the highest in history. With stocks to use rations also very high (third highest ever), conditions are not bullish and significant rallies are very unlikely.
To put this into perspective, current U.S. stock levels are more than double levels in the last 10 years. In the last 26 years, stock levels were only higher two other years — 2005 and 2006 — the last time bean prices were under $7.
The market seems poised for a long-term downward grind.
The South American weather was ideal for corn and beans this year. Production estimates continue to increase. This news hits beans harder than corn because the South American crop is over 50% of the world’s bean production while its only 20% of corn.
The USDA report also showed a slight decline in feed usage and a slight increase in corn for ethanol usage.… Continue reading