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Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Soybean bulls desperately trying to stoke any old-crop flames that still exist by talking about strong Chinese demand (lack of cancelations) and the thought that US crushers will NOT have as early of access to new-crop supplies as some had once anticipated. In simple terms, the bears were thinking the Chinese would eventually make some old-crop cancellations. That would have freed up some additional surplus for domestic meal demand. The bears were also thinking US crushers had enough inventory and soybean supplies on hand to hold out until new-crop supplies arrived. The problem is a good portion of the crop in the South is now running a bit behind, as indicated by the USDAs weekly "blooming" numbers that showed MS, TN, KY and LA all a bit behind their respective 5-year average. Wetter conditions to the South might also eventually delay the harvest of early-soybeans. There is also some fear in the marketplace that the farmers aren't going to be as eager to sell directly out of the field this year with prices having fallen to such low levels. As I have noted the past couple of weeks many ag banks across the country are starting report an increase in producers looking to extend lines of credit in order to hold and store more bushels for longer periods of time. In other words the trade is wondering if the crushers to the north are going to end up having a tougher time than originally imagined sourcing enough new-crop soybeans in time to supply end-users with meal??? I should also point out the fact the trade is closely watching the I-States (Iowa, Illinois and Indiana) as they account for about 30% of our harvested soybean acres. Not only is moisture important during the next 45-days, but so will be cooler than normal temps across the largest producing soybean states. Remember when I said a few days back the trade wasn't concerned or worried about "demand"...well now all of a sudden they are starting to scratch their head a bit? The "death march" lower has, at least temporarily, been placed on hold, I'm assuming until more is known about demand and the true availability of new-crop beans. Producers who need to reduce more risk should look very closely at an opportunity above $11.00 per bushel. CLICK HERE for my daily report....
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