The Soybean Shuffle: Whats Next?
Nov 14, 2013
Soy traders are now talking about six consecutive higher closes…a feat that has not happened in several months. Are we due for a setback? You bet we are. Keep in mind from the low to the high during that short time period we added just over $0.70 cents. The market did its job and pried more bushels from the hands of US producers. We had two of our own cash-sale targets hit this week. Did the exporters and crushers buy enough bushels to get them through this massive wave of demand? I say no way possible. I also say it will get tougher and tougher for them to source the needed bushels once the US farmer puts them away and takes a little vacation time. So the "dance" continues. Learn one of the bulls favorites, its called "The Soybean Shuffle"...
Dance Step #1: Exporters and Crushers have to rally prices in order to secure more bushels. Especially when crushers are earning healthy margins and exporters have big line-ups at the docks.
Dance Step #2: When the Crushers and Exporters have what they can handle they stop bidding up the prices and in turn we start to backpedal.
Dance Step #3: Once prices fall far enough the US producer simply refuses to sell any more supply and prices have to once again move higher.
Dance Step #4: Prices have to continue moving higher until it entices the US farmer to release more of his bushels.
Repeat Dance Steps #1 - #4: Except this time the Crushers and Exporters may have to bid up prices just a little bit higher since there become fewer and fewer available bushels in the mix. CLICK HERE to get all of my market comments...