Midweek trade was mixed ahead of the USDA report. Meal rallied on Argentine weather concern, while soyoil gave back all of Tuesday’s gains. Soybeans finished a couple cents lower. Funds were sellers of 5,000 contracts and heading into the USDA report are estimated to hold a net short bean position close to 45,000 contracts.
Ahead of Thursday’s WASDE report, the average trade estimated calls for US soybean stock estiamte near 490 Mil Bu, 20 Mil Bu over the January forecast. The US crush rate has remained strong and could be revised upwards.
A lower export forecast is expected due to the lagging export sales and shipments. The chart reflects the last time that the USDA lowered their export forecast in February was in 2006/07 by 20 Mil Bu. The largest cut of 40 Mil Bu was in 2005/06. Our best guess is that tomorrow’s US soybean export number could fall another 25-40 Mil Bu.
Afternoon weather forecasts added lite rains for Argentina next week, but not nearly enough rain to break the drought.
ARC doubts the WASDE production forecast will fully account for any crop losses as the heart of the Argy growing season is dead ahead. The Brazilian soy crop will likely be raised. ARC argues against a new leg down with support below $9.70 March.
