Soybean seasonal rebound driven by drought upgrading in South America

Introduction: recently affected by the rising drought in South America, CBOT soybeans have seen a blowout rise driven by the continuous large-scale closing of short positions of CBOT fund With the market's expectation of soybean yield reduction due to drought in South America, it is necessary for us to reexamine the global soybean supply and demand pattern so as to make relatively objective analysis and judgment on the future soybean price trend According to the latest monthly soybean supply and demand report released by USDA in February, according to the drought situation in South America at that time, USDA revised down the global soybean supply by 2.15 million tons due to the reduction of Brazil's soybean output by 1.5 million tons and the soybean output of some exporting countries, but it also lowered the global soybean consumption by 2.9 million tons, so the global soybean supply was large in 2004 / 05 In terms of soybean carry over inventory, the reported value in February is slightly higher than that in January, which shows that Brazil's slight reduction in soybean production did not alleviate the global soybean oversupply in 2004 / 05 With the recent upgrading of dry weather in South America and the emergence of Asian rust in Argentina, the market has started to raise its expectation of soybean production reduction in South America, among which the more authoritative organizations such as oil world recently said that due to the continuation of drought and hot weather in southern Brazil, the Brazilian soybean production estimate has been lowered to 60.5 million tons Agrural, Brazil's independent grain analysis agency, said it had cut Brazil's soybean production from 62.6 million tons expected in January to 60 million tons, and said that if the weather in the South continued to dry, soybean production would be further improved The same situation also occurs in Argentina, Paraguay and other South American soybean planting countries Although we are not sure how much South American soybean production will be reduced due to drought and Asian rust, it is certain that the USDA soybean monthly supply and demand report in March will continue to reduce the soybean production expectations of Brazil, Argentina and Paraguay Based on the current information, we believe that Brazil's soybean output will continue to decline by about 3 million tons, Argentina's by about 1 million tons and Paraguay's by about 500000 tons At that time, the global soybean output in the March soybean monthly report may be 224.12 million tons If the global demand remains unchanged at 205.41 million tons, the global soybean supply in 2004 / 05 will still be in the midst of serious oversupply, even though USDA soybean month in April The report continues to reduce the output data of South American soybeans We believe that at present, the global soybean supply surplus of over 20 million tons cannot be balanced through the reduction of South American soybeans Therefore, we believe that the basic pattern of global soybean supply exceeding demand cannot promote the soybean price to return to the bull market At present, the sustained sharp rise of soybean price can only be characterized as a seasonal rebound.