Will Soybeans Continue to Trade Above $10?
Aug 26, 2010
I recently wrote in my daily trade wire that I am going to continue to stick by my guns for now and look for lower prices in the weeks ahead as farmers start to report record pod counts and higher prices start to encourage more acres here in the US and in South America.
If you remember back a few months ago many analysts were expecting fewer acres in Brazil and Argentina next year, we are now hearing reports that prices have recovered enough that fertilizer sales are really starting to rebound, and the amount of fertilizer now sold projects out to an actual 5% increase in soybean planting. Take into account that the USDA has forecast the global soybean carryout for 2010-11 to be over a staggering 64mmt, and that number assumed a cut of 4.5mmt from Argentina and a cut 4mmt from Brazil.
If our reports are accurate and more bean acres are actually planted, we could be looking at a carryout of over 73mmt. If the global economy doesn't rebound and continues to build strength in demand there will simply be too many beans in the marketplace to allow prices to stay at these levels. Certainly things can change though as we move ahead, but as we sit here today I think prices will break into harvest before eventually moving higher on stronger demand and improving economic forecasts.
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