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Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
We have seen soybean prices continue to search for direction as traders still seem somewhat torn between the tight old-crop story and what appears to be an extremely burdensome new-crop story. There seems to be a bit of a squeeze taking place in the front-end of the trade as the market thins out and old-crop cash supplies remain tight. The problem is the trade isn't giving the old-crop story near as much weight as it once was, therefore it's ability to broadly influence price has been diminished but coupled with some neutral to bullish USDA news next week could you see bean prices pushed higher? Soymeal was the part of the bean complex that lead us to higher ground during this past run up and we have continued to see strong meal demand, even against substantial headwinds. Next weeks USDA report will almost for certain give us a corn production number, that is in record territory. Most in the trade are calling for a 170bpa number for yields but the bean yield number is one that could come under some question. All of the crop reporting agencies have been above the current USDA estimates on the corn side but the beans have been viewed not as rosy. We have seen, just this week, two reporting agencies come out with estimates at or below the USDA current 45.2 bean yield number. It is a known fact that for most areas the beans were planted in cool temps and wetter than normal conditions. The talk in the trade was that beans do not like wet feet and if it continues does it have a negative effect on yields? More recently, we experienced the driest stretch of the summer pushing many areas to the point the bean crop was close to beginning to go backwards. Now the rains have come but is there enough uncertainty out there for the USDA to leave the bean yields unchanged or even go lower? We have compared this crop year to '04 and '09, which both had record yields, but there were some glitches in those years bean crops. In both years, the USDA lowered yields before pushing higher in later reports. In '09 it was the next month in the September S&D report but in "04 it was not until the October S&D report that the yields were increased by 3.5bpa. My point being, is that we all think this bean crop is getting bigger, me included, but the road that takes us there may not be without some detours. Could we see a short term pop to make additional sales? With 85 million acres going in the ground, we will have a record crop but is there the possibility of a bullish bean story next week in the USDA report? A little setback on yields could be seen before things push higher by the end of the year. CLICK HERE for my daily report....
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