What to do with your remaining soybeans??
Nov 11, 2013
Soybeans remain mixed, with bulls screaming about an extremely tight nearby supply situation, followed on the back-end by the bears screaming about a very bearish record South American crop and what looks like a potential record US crop going in the ground for 2014. Technical traders continue to talk about a price gap on the JAN14 chart at around $13.75. That number seems a little optimistic, but I wouldn't rule it out of the realm of possibilities. For me, I would just like to see a strong close back above the $13.15 level before I start talking about prices north of $13.50. I am assuming if both Chinese demand and US crush margins stay strong, which I think they will, we could be looking at a very difficult equation to solve in soy closer to year-end. Producers should keep looking at nearby rallies in the front-end as an opportunity to get more of your 2013 crop priced (In our model account we still need to move the final 30% of our cash production). We also have to be hoping the nearby somehow pulls the 2014 and 2015 higher so we can reduce a little more risk out there as well. I realize South America still has an entire growing season of potential problems and that we do not raise crops inside a bubble, but I feel like eventually, one of these years, both South American and US producers are going to enjoy favorable growing conditions back-to-back. If that happens in 2014, with record acreage in the ground, bean price could take a serious tumble. Just make sure you recognize the downside concerns and are working with your advisor to reduce your risk in the deferred contracts.
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