Has the long-term trend in soybeans changed?
Apr 25, 2013
Producers and traders should take note of the recent changes I have made in my "Bullish-Bearish" ratings monitor along the right side of the report. This is the first time in several years that my soybean rating has dropped to a level of "Negative-3." We could argue all morning about the specifics, but I am simply becoming more and more concerned about China and the large amount of cheap soy supply South America will soon be sitting on.
Not only does there seem to be more concern than normal in the trade about the strength of the Chinese economy, but there is more and more fear in the air regarding the H7N9 "bird-flu" virus. Just yesterday the "World Health Organization" reported this is one of the most lethal flu viruses ever studied. In fact Dr. Keiji Fukuda, a leading flu expert, is saying people in Beijing are catching the H7N9 virus from birds much more easily than they were the H5N1 virus that ravaged the poultry industry across Asia back in 2003. I should also note, the virus has now spread into Taiwan. I maybe preaching to the choir, since the NOV13 new crop soybean contract has essentially gone downhill since posting its $14.09^6 high back on September 14th of last year.
There has been a few blips on the radar screen that have created a couple of brief rallies, such as South American weather woes, logistical concerns, and Chinese demand... but nothing that has been able to sustain a rally longer than 30-days. Point is the trade continues to lean on the sort side of the bean market. All rallies have been unable to hold and have been answered by the trade ultimately posting lower nearby lows. Outside macro concerns aren't helping the situation, as China's economy seems is being doubted more and more by those in the know.
Bottom-line, the tightness in old-crop soy has been helping to keep this market supported. Eventually we are going to walk in one morning and the entire trade will have flipped the page (electing to look at the new-crop picture rather than the old)... As producers we have to prepare ourselves. Spec's should continue to look for opportunities to play the new-crop game from the "short" side of the table.
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