Producers holding old crop soybeans should....
May 07, 2013
Soy bulls continue to talk about tight old-crop US supplies, while the bears point to South American soy heading our direction. From what I continue to hear, soy supplies from Paraguay are scheduled to reach US shores in Norfolk, Virginia some time this week. Rumor is one cargo, then two more to follow. The trade is also keeping their eye out for supplies eventually coming from both Argentina and Brazil.
The biggest question mark however remains soymeal... particularly if and when South American supplies will land here in the US. As it stands right now there is nothing reportedly headed our direction. Eventually you have to believe South American soymeal imports will solve our problem, but how long it takes for that to happen remains a serious question. I suspect as long as they continue to focus on shipping soybeans the meal will take a backseat.
Lets keep in mind logistical constraints in Brazil are obviously starting to break loose as they reportedly exported a NEW record 8.2 million metric tons of beans during April. This also includes a NEW record of 6.55 million tons of soybeans shipped to China for the month. My gut tells me soy prices, at least for the interim, will remain supported on extremely tight old-crop supply. I also believe this Friday's USDA report has a chance to once again be bullish the old-crop as the USDA has no real choice but to increase exports and crush.
Producers still holding old crop bushels may want to simply hold and see what Friday's USDA report unveils. As far as new-crop, taking into account our current landscape, I still believe prudent risk management is to have at least 50-60% of your estimated production priced at profitable levels north of $12.00.
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