Tuesday, March 27, 2012

Rabobank Raises Average Soybean Price Call by 10%

Rabobank has a pretty solid ag research team.
From Agrimoney:

Need to ration demand to lift soybean price to $14
Rabobank became the second group in two days to forecast a return by soybeans to $14-a-bushel even as prices retreated in Chicago, sapped by the long-awaited arrival of a wave of profit-taking.
The bank, which forecast the oilseeds rally would hand further gains to palm oil too, hiked by $1.40 to $14.00 a bushel its forecast for the average price of Chicago's near-term soybean contract in the April-to-June period.
Forecasts for soybean prices later in the year were also raised.
The upgrades reflected a further slice to estimates for the South American soybean harvest, which the bank pegged at 115.5m tonnes, down 13% year on year and 4.9m tonnes below its February forecast.
In the southern Brazilian states of Parana and Santa Catarina, particularly badly effect by drought, the harvest was seen collapsing by 30% to 20m tonnes.
'Higher soybean prices are needed'
"Fundamentals suggest higher soybean prices are needed in order to ration demand, as the outlook for South American production continues to deteriorate," Rabobank said.
"This smaller supply outlook… has not yet been met with sufficient demand rationing. Crush margins have improved and Chinese import demand remains strong."
On Monday, Morgan Stanley said that margins by crushers in China, the top soybean importing country, had "turned positive, boding well for US exports". Crushers had since August run at losses which approached $500 a tonne late in 2011.
Also on Monday, Thomas Mielke, the head of influential analysis group Oil World, forecast soybean prices would "reach $14 quite soon and probably rally towards $14-$15 or above sometime in the next four-to-eight weeks, depending on South American harvest progress and harvest result"....MORE