CBOT GRAINS AND OILSEEDS Fundamentals and Outlook for 2006

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CBOT GRAINS AND OILSEEDSFundamentals and Outlook
for 2006

• Avtar Sandu
• Wang Jue
• Phillip Futures Singapore
• (65) 65311509
• (65) 63343183

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Fundamentals

• USDA Supply and demand estimates
• Quarterly stocks, carry
• Planted area, yield, production forecasts
• Weekly Progress Reports
• Export Inspections
• Weather Forecasts
• Soil conditions
• Strength/weakness in other markets
• Seasonality
• Commitments of Traders (funds)

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Feed grains supplies down 4, Use up 4
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Corn

• Fundamentals and Outlook

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Inventory reported at 4.363 billion bushels (40
million up from a year ago)
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Ending stocks are lowered 114 million bushels.
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With a trend yield of 149 bushels per acre, crop
would total 10.74 billion bushels, 191 million
larger than projected in March intentions.
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But increase is offset by smaller level of
beginning stocks, higher feed and residual use.
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Harvested acreage is expected to expected to be
down 3.016 million.
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Planted acreage in 2006 was reported at 79.366
million acres, 1.347 million more than the March
intentions.But 2.393 million less than in 2005
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Weekly Crop Progress ReportsGood to Excellent
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Feed and residue use is raised 100 million
bushels.
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The season-average price range is still on the
high end (1.95 to 2.00 per bushel) a
reduction of 5 cents from last month.
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Cash and average farm price
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For 2005/06 US corn exports are increased 25
million bushels.US corn exports forecasts for
2005/06 September August marketing year up 16
compared with previous year.
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Food, Seed Industrial Use to Increase

• FSI use of corn in 2006/07 is expected to total
  3.535 billion bushels, down 10 million from last
  month.
• But in 2006/07, FSI use would represent 30 of
  total use, up from 27 in 2005/06.
• Corn used to produce ethanol is expected to show
  the highest increase.
• Corn used to make ethanol in 2005/06 was
  estimated up 21 from the 1323 million bushels
  used in 2004/05

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CBOT Corn Nearby Futures
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Corn Conclusion

• US outlook for 2006/07 includes higher
  production, lower beginning stocks and higher use
  compared with last month.
• Production is increased due to higher area while
  feed and residue use rises in line with an
  increase for 2005/06
• Ending stocks are nearly unchanged
• Plantings up from March intentions
• US 2005/06 Corn Exports increased
• Food, seed and industrial use continues to
  increase.
• Projected price range remains at 2.25 - 2.65
  per bushel.

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US SoyBeans

• Fundamentals and Outlook

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Inventory is estimated at a record of 990.1
million bushels (290m larger than last year).
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Production at 3010 million bushels (81.9m tons),
down 70 million bushels
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Ending stocks for 2005/06 are projected at 545
million bushels, down 25 million bushels2006/07
ending stocks at 560 million bushels, down 95
million from last month.
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Planted Acreage estimated at 74.93 million,
2.788 million more than last year but 1.965
million fewer than indicated in March.Harvested
acreage is projected at 73.935 million, 2.575
million more than last year but 1.8 million below
June projection
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With a trend yield of 40.7 bushels, the 2006
crop would total 3.009 billion bushels, 70
million less than project in March.
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A trend yield points to a 2006/07 marketing year
price very near the 5.70 average expected for
the current year. (mkt is at 6.25)
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US season-average soybean price for 2006/07 is
projected at 5.00 - 6.00 per bushels, down 10
cents on both ends of the range as forward
pricing opportunities for new crop have remained
at substantially lower price levels than the
previous 2 marketing years.
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CBOT SoyBeans Nearby Futures
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Soybean Meal Supply Demand Estimates 2005/06

• Crush set a record for the month at 146.2 million
  bushels.
• Cumulative crush for the first three quarters
  advanced to 1310 million bushels, and exceeds the
  2004/05 pace by 16.5 million.
• Strength in soybean meal exports helping to
  sustain crush demand.
• When the fourth quarter is complete, the 2005/06
  crush is expected to total 1720 million bushels.
• The crush forecast is raised 5 million bushels
  from June and compares with 1696 million in
  2004/05.

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Soybean OilSupply Demand

• Processors output of soybean oil this season is
  likely to accumulate into a recordhigh (2.85
  billion pounds carryout) from 2.79 billion from
  last month.
• For the 2006/07 season, ending stocks were
  revised higher to 2.479 billion pounds from 2.419
  billion last month.
• World exports of sunflower oil rapeseed oil a
  competing factor this season.
• Energy and other Oilseeds markets (palm Oil) -
  key factors

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Soybean Meal Soybean Oil Supply Demand
Estimates

• Soybean meal projections unchanged at 155 to
  185 per short ton.
• Soybean oil projections at 22.5 to 26.5 cents a
  pound
• Soybean crush for 2005/06 is projected at 1720
  million bushels, up 5 million bushels from last
  month.
• NAOP said 131.3 million bushels of soybeans were
  crushed in June, more than expected.
• Increased crush reflects stronger-than-expected
  soybean meal exports

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CBOT Soybean Meal Nearby Futures
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CBOT Soybean Oil Nearby Futures
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Oil Crop Outlook

• Farmers plant fewer soybeans than intended but
  more than last year.
• Stocks are anticipated at all time high
• More soybeans crushed in June than expected
• Strength in soymeal exports
• High stock carryout in soyoil

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Wheat

• Fundamentals and Outlook

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Stocks were estimated at 568 million bushels, 21
more than projected in the USDAs last months
supply and demand report.
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Projected US 2006/07 are up 17 million bushels
from last month (higher beginning stocks and
imports more than lower production)
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The larger estimate suggests a smaller feed and
residual use during the 200506 marketing year.
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Planted acreage estimated at 57.873 million
acres, 644,000 more than planted the previous
year and 745,000 more than stated in March.
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Harvested acreage of all wheat in 2006 is
projected at 47.084 million, 3.035 million less
than harvested last year.
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The US average yield could be much as 1.2 bushels
less than projected to maintain year ending
stocks at the 416 million bushels projected
earlier.
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Decreasing Exports and imports increased by 5
million bushels
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The projected all-wheat, season-average price
range is raised 10cents on each end to 3.70 -
4.30 per bushel.
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The season-average prices (SAP) received by
farmers for 2005/06 were different by class and
year-to-year
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CBOT Wheat Nearby Futures
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Wheat Supply Demand Conclusion

• 2006/07 wheat supplies up
• All winter wheat Planted area up 2 from 2005
• Rising monthly prices encouraged HRS plantings
• All wheat production down from last year
• Beginning stocks for 2006/07 are up from last
  month
• Global use and 2006/07 ending stocks prospects
  increased
• World wheat trade up, China a net exporter

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Weather Outlook

• Weather remains the key market factor to corn,
  soy wheat.
• With the majority of US corn crop pollinating,
  and spring wheat filling kernels presently, a
  sustained hot streak across the central US could
  shrink western corn belt and Northern US Plains
  spring wheat yields significantly.
• Demand trends for corn remains strong.
• A stocks/usage of 5 in 1995/96 resulted in a top
  of 5.54 ½ for nearby futures.
• If weather dont shift back to normal, expect
  extreme volatility.

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• Soybeans will follow the grains, but August
  remain its important pod-filling growth period,
  so may make more sustain rallies then.
• If the weather holds in early august, soybean
  crop could be back on track to receive above
  average yield for the coming year and with ending
  stocks already projected to record highs could
  spark increased selling of old crop soybeans.
• In addition, about 65.8 million bushels will be
  forced out of the 9-month loan this month and
  nearly 81 million for bushels for August. As
  producers pay back these loans, the soybeans are
  likely to hit the cash markets.
• With Brazil soybeans still trading cheaper than
  US soybeans, short term export demand is slow.
  (export sales remained down 20 from last year.

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Hot Dry
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Seasonality in Corn
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Seasonality in Soybeans