Current Marketing Thoughts
Kevin Van Trump
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Bullish Soybean Cards left in the Deck...
Dec 02, 2013
If we run into any type of major production hiccup in South America during the next few months bean prices in 2014 could push much higher. On the flip side, if the weather cooperates in South America, and producers planting record soybean acres, we might soon find ourselves swimming in a glut of surplus. As each day passes and more acres go in the ground in South America, with very little sign of a major weather hiccup, you have to be more concerned about the downside risk associated with an additional 15 million metric tons of production hitting the marketplace in 2014/15. Lets not forget we are also thinking a similar scenario could play out here in the US where producers lock in prices and switch more production acres to soybeans. Do I like locking in ALL of my 2014 production at these levels? Certainly not, but I do think you need to have some type of protection in place on a good size portion of your estimated production. Anything is still possible in South America??? There could be problems during the growing season. There could be flooding problems during harvest. There could be political issues, labor strikes and logistical problems that keep the crop from getting out of the country or to the ports.
Keep in mind, the World Cup soccer games are scheduled to be played in Brazil this summer and from what I am hearing the roads and construction have become a huge mess. Lets also think about how many people have been pulled out of the Ag labor force to help the country get ready for this major world event. From my perspective this means fewer available laborers in the fields and at the ports to help harvest and transport the upcoming corn and soybean harvest. Certainly not trying to discredit the possible downside exposure that exists in the back-end of the bean market, but just wanting to point out not all hope is lost for those holding out for higher prices. Demand remains strong and currently supplies are tight, there are several dynamics and catalyst that have to play out still for prices to collapse, so place your bets accordingly. Click here for all my comments....
I suggest carefully monitoring and adjusting your hedges and overall exposure as "risk" to the South American crop starts to come off the table. Just remember, as the market becomes more and more comfortable with the "weather" and South American yields, 2014 prices are almost certain to tumble further down the hill.
Latest South American Update: I am hearing more soy acres have been going in the ground over in Argentina than what analyst in the area had originally anticipated. Yes, there are significant planting delays, but with planting being pushed so far back in many locations more and more producers are being forced to switch some intended corn acres to soybeans. Currently the USDA is estimating Argentine soy production at 53.5 million metric tons, while several sources inside the country are now thinking the crop will be more like 57-58 million metric tons (maybe even higher). I am also hearing talk and plans from producers for more second crop soybean acres. In turn several analyst are now starting to work their Brazilian production estimates higher. The USDA is currently estimating the Brazilian crop at 88 million metric tons, while several sources are pushing their estimates to between 90 and 92 million. Hard to imagine, but many insiders are reporting 110-120 day beans look as if they will easily yield 100 plus bushels per acre. Remember, we are probably just 30-45-days from seeing full-season beans coming out of the ground in Brazil. Point I am tying to make is that "risk" could start coming off the table quicker than you might think...Click here for all my daily comments...