The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Soybeans bulls continue to remind the trade of the old adage "soybeans don't like wet feet". In other words the heavy moisture levels are doing very little to insure a record crop yield like the USDA currently has projected. From a "technical" perspective, most new-crop traders believe a close below $12.00 could start an avalanche to the downside, while a close back above $12.50 could bring out the green flag and once again prompt racing to the upside. The tightness in old-crop, however real it may be, seems to be less of a story and less influential in regard to overall soy complex. Yes, it still matters, but not nearly as much as it did a few weeks back. Chinese credit issues and banking investigations are starting to gain more attention and may eventually turn out to be a much larger monkey-wrench for bullish players than the trade had anticipated. The USDA is expected to raise both their domestic crush and export estimates for soybeans, but the kicker remains the fact most bears believe the USDA in turn will raise their production estimate for last years soybean crop. Meaning if the USDA raises demand by 20-40 million bushels, they could announce they underestimated last years crop production by a very similar amount. Net-net, in typical USDA fashion, there might not be as big of a change in the balance sheet as some are hoping to see. Stay on your toes and use any type of extend or unforeseen rally to the upside as an opportunity to lock in profit and reduce additional longer-term risk. With the NOV15 contract bobbing it's head above $12.00 locking in profits on a percentage might not be the craziest of ideas??? I already have 20% priced and will be looking to do more if we get a pop to the upside. CLICK HERE for my daily grain report.
No comments have been posted to this Blog Post