The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
As we saw at the beginning of last week, the grains, and especially soybeans rallied early in the week before selling off by .50 cents by the end of the week. The beans were the driving force that supported all the grains. Most of that initial runup was due to the projection that the crop conditions would be lower for soybeans. Last week saw a 2% reduction, in the gd/ex range and some in the trade are thinking that we could see another 2% reduction, this afternoon when the USDA releases its latest crop condition update. Many insiders are asking themselves, if last week was the start of a string of crop condition reports, that will show that this dry spell and cooler temps that we are in, has actually begun to work backwards on the bean yields. The bulls are quick to point out, that not only is the crop being stressed more now but it is setting up to be adversely effected by an early frost. I am not in that camp long term but do agree you may see some short term bounces, as weather updates provide the bulls much needed news. The bears have stated this weather pattern has done nothing but added to yields as plants are slower to mature. Along with great growing conditions, throw in the fact that no matter how you slice it 85 million acres of beans, pencils to making a huge crop!! My thoughts have stayed the same that as we see any bounce in these prices we should use them as selling opportunities to get caught up on sales. I have been saying for several weeks that the bearish technicians are thinking the $10.06 area vs. the NOV14 contract could be the next major downside target. Perhaps we take a bit of a "wait-and-see" approach from there, but if the August rains can simply deliver somewhat adequate moisture across the Midwest, I have to believe the trade will fire back up the bearish momentum and look to push soy prices down even further, perhaps closer to the $9.50 range. CLICK HERE for my daily report...
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