Soybeans Remain Strong Before Report
Jun 03, 2013
Soybeans continue to lead the market, fueled by another round of massive rains over the weekend, cooler temps in the forecast (causing concerns about it drying out), and a wide variety of opinions regarding new-crop production and old-crop demand. Some sources will tell you new-crop soybeans are considered "LATE" after June 1st. Insurance companies however tend to pay out full-guarantees on beans planted up toJune 15th. Others believe Spring has simply been pushed back and soybeans won't have "yield-drags" unless planted past late-June. Regardless, the ruckus in the market has started to pique the interest of the trend following funds, especially now that NOV13 beans have closed back above their 200-day moving average, something that hasn't happened since early-Feb. Technical bulls are now throwing around talk that NOV13 beans could test the $13.50 range (testing the 2013 high) before settling back into a more traditional pattern of trading. To say the past week has been extreme is an understatement. In the past seven trading days we have added almost $1.00 per bushels from the low to the high! This is clearly a "supply" driven rally based on weather fears. With this being the case, I am of the opinion producers should continue to use a "scale-up" marketing type approach. Simply meaning to continue trying to reduce risk on the upside momentum. If you would like to get more detailed information on what is driving the markets, CLICK HERE for my daily report.
As for those still holding old-crop soy bushels, be careful, as rumors continue to circulate that the Chinese are making more cancelations. Because of this many in the trade believe the USDA will soon be lowering their old-crop export estimates just a touch (10-20 million bushels). One saving grace though is "meal" demand. We surprisingly (here in the US) continue to make big export sales to countries such as the Philippines, Venezuela, etc... With this in mind there is reason to believe the current USDA crush estimates are actually too low, and may need to be bumped higher by 30-40 million bushels. Net-net you could actually see the old-crop balance sheet tighten a bit, that is unless the USDA magically finds some additional old-crop supplies...don't rule out the unthinkable!