SOYBEANS FUTURES

On December 9, 2005, the USDA increased its 2005-2006 U.S. ending stocks estimate from 350 to 405 million bushels. Production was estimated at 3.043 billion bushels with total use of 2.898 billion bushels. The resulting ending stocks to use ratio is 14%, matching the most in eleven years. Worldwide, the USDA estimated 2005-2006 ending stocks at 48 million tons or 22% of annual use, up from 42 million tons in the previous year. Brazil and Argentina harvested 3.3 billion bushels in 2004-2005 and are expected to increase production 10% in 2005-2006.

In 2005-2006, the USDA is expecting exports to fall 8% and so far, they are down 25%.

Soybean exports are reduced 55 million bushels to 1,020 million bushels as competition from South American soybean exports continues to limit U.S. trade prospects, especially to EU-25 and China.

USDA's World Ag Supply & Demand Estimates. December 9, 2005.

"Improved seed genetics and better farming practices were a definite benefit to crop development, as 10 years ago, this summer's weather would have wiped out crops in areas affected," says Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago. Improved farm income in the last few years allowed for better land-management strategies, with minimum or no tillage, better hybrids and fertilizer, and insecticide use that give crops the best production potential, adds McCambridge.

Barron's. September 26, 2005.

USDA's World Ag Supply & Demand Estimates. December 9, 2005.