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.
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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