The Debts of the World: Soybeans Action Potentially Bearish in 2010

Soybeans have had a nice runup this year starting in late Spring - early summer. But bulls may want to watch out. Farmers - sensitive as always to price - have decided to increase their plantings for next year. As you know, the basic law of supply and demand works both ways . . . .

Soybean Supply Glut Possible In ‘10; Prices May Fall-Analyst

Despite U.S. soybean supply shrinking to near record lows following a surge in import demand from China this year, and previous weather-related crop reductions in South America, the global market could well be heading for a supply glut of millions of tons above global consumption forecasts next year, a senior agricultural commodities consultant said Thursday.

“The U.S. Department of Agriculture is forecasting a near record U.S. crop -
around 88 million tons - while Brazil, Argentina and Paraguay between them could produce more than 120 million tons, following last year’s drought. We’re looking at the potential for a big oversupply situation. We could be looking at an oversupply of more than 19 million tons above what the USDAis forecasting global consumption to be at next year,” said John Baize, president of John C. Baize and Associates.

“Farmers who are selling soybeans now at $10.00-$11.00/bushel, by April
could be glad to be getting $8.00/bushel. They could even be getting less.”

A combination of a bumper U.S. crop and increased plantings in South America by farmers who lost money because of last crop year’s drought would likely be behind any potential surge in output next year, Baize said.

Source CME News For Tomorrow