Is it possible for this Soybean market to continue higher?
May 22, 2013
Soybean technicians are keeping a close eye on the July contract as it approaches the $15.00 level, an area we have not been able to breach since late last summer. I suspect if the stars align and we get the "technical bulls" on the bandwagon with a breakout to the upside, along with "fundamental bulls" on the bandwagon as balance sheets look almost impossible to solve, we might just have ourselves a runaway train to higher ground in old-crop soy. This is obviously good news for producers holding old-crop bushels, and also good news for producers who are behind on their new-crop sales, as tightness in old-crop artificially keeps new-crop prices elevated.
With very limited soy supplies here in the US, the trade may continue to be apprehensive in breaking new-crop prices, at least until the upcoming crop looks more like a "sure thing." I am sure many bears will continue to talk about $9.50 soybeans, just remember $11.50 soybeans will have to happen first, and that's a number we haven't seen since this time last year. From a technical perspective I am looking for NOV13 beans to remain in a near-term range from $11.80 to $12.50. Producers holding old-crop bushels need to be paying close attention to the basis, I am hearing it is breaking in several locations as many processors are rolling bids out to August. UN officials saying the H7N9 bird-flu virus in China appears to have been brought under control, primarily due to restrictions at bird markets. Initial estimates show the virus to this point has cost the Chinese economy some $6.5 billion in losses. If you’re a bear speculating in this market, my best advice is, "don't get caught out over the tips of your skis." There could eventually be a big run to the downside, the last thing you want to do is break a leg early and miss the best part of the slope.
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