Bean Fundamentals

Here are a few charts based on the recent USDA report data. My general view of the bean market is extremely bullish. We haven't seen such tight numbers right after a harvest in many years.

The first chart is total useage. You can see even with current high prices of 1280 SN11 useage is still smoking the previous four years. In my view even with current high prices we really haven't started rationing supply. With useage so strong here prices will have to surge higher to fight for acres next spring. That says nothing to the fact that we may have potential production problems next year.



Stocks to Use, my favorite fundamental indicator. It's a formula that figures current stocks to current useage. It's a pretty good gauge to how tight supplies are compared to useage. Typically a stocks to use under 7% or 8% is extremely tight. The latest USDA report came in at an amazingly low 4.89%. My records go back as far as early 90s and I've never seen s/u this tight.

Final chart is ending stocks and tells the same story. We haven't seen numbers this tight after a fairly large harvest in many years.

BULLISH BULLISH BULLISH

USDA DEC 2010

Beg. Stocks: 151
Production: 3375
Total Supply: 3536
Total Use: 3371
Ending Stocks: 165
Stocks to Use: 4.89%