More turbulence is seen ahead for Chicago Board of Trade grain markets with the government's updated end-season stocks forecasts to take center stage this week. Traders are edgy ahead of the US Agriculture Department's May supply-and-demand report to be issued on Tuesday at 8:30 am EDT (1230 GMT), expecting the government to shave its estimates of world and US soyabean stocks.
There is no doubt the numbers will be lower, it's just a question of how low. Currently, USDA is forecasting this season's US soya stocks to slip to a five-year low of 165 million bushels given China's bean buying spree, especially from the world's top two soya exporters: United States and Brazil.
Grain analysts polled by Reuters on average expect that number to slip another 39 million bushels to 126 million in Tuesday's report. But by the end of the marketing season on August 31, stocks could shrink to 100 million bushels or lower if China keeps buying beans. "The focus will be the need to ration soyabeans," said grains analyst Roy Huckabay with The Linn Group in Chicago.
Traders watched Chicago Board of Trade soyabeans soar to a seven-month top of $11.45 a bushel last week on tight stocks and worries about a smaller soya crop in Argentina, the third largest soya exporter. The price spread between CBOT July and November soyabeans saw some "radical" moves as well - July beans climbed to $1.40 premium to November, then fell to $1.30 on Thursday.
US soyabean exports are running 12 percent ahead last year ago in a year when USDA expected them to down from 2008."We will be watching to see if China returns to the market ... they might take a bit of a hiatus from buying or at least such intensive buying," said senior oilseed analyst Anne Frick with Prudential Bache Commodities.
TALE OF TWO CORN BELTS: MORE SOYA? Changes in the weather or forecasts will also be a key driver of CBOT markets in the coming week. This season is a tale of two Corn Belts, with the eastern Midwest struggling with too much rain and delayed corn planting - a factor that could lead to more soya acres if farmers cannot get all their intended-corn acres seeded during May.
As a rule of thumb, corn not planted by May 15 in the Midwest can yield a bushel an acre less per day due to the shorter growing season and autumn frosts. According to USDA latest planting data, 33 percent of the corn crop was seeded by Sunday. Typically half the crop is planted by early May.