So Where do Soybeans Stand in this Late Planting Mix?
May 02, 2013
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As we wait to get into fields for some weather to pass, corn and wheat have been able to stay positive. This should be the case as planting progress is at record lows and tensions are getting high about if we get a corn crop in or not. Whether it is too late to plant corn or not will really depend on where you are, but for most areas there will still be time as long as the forecast for the next two weeks keeps planting opportunities in it. But where do the soybeans stand in the mix?
It seems fairly cut and dry in the corn market right now as far as were prices might be going. It is a weather market, and if weather gets better corn should go down, if weather gets worse or continues to keep planters out of fields then corn should go up. But, figuring out what this all means for soybeans is a trickier proposition. On one hand late corn plantings may mean more soybean acres, on the other hand if weather really stays bad maybe that acreage is just lost or worse we cant get the intended soybean acreage planted. At the same time you have a massive crop in South America, but they have been very slow to step up to the global market.
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If we walk in next week and the weather forecast is for cold temps and rain or snow will the soybeans follow corn on a limit up move, or come under pressure on ideas that at this point it is time to give up on corn and plant soybeans? Really I think it depends on how many corn acres are lost. If corn were to loose 1.5-2.5 million acres there would still be enough corn planted to end up with well over a billion bushel carry over even if we fall short of trend line yields given the projected demand structure. In this case the added acreage to soybeans along with huge South American supplies would likely mean a lot of downward pressure on soybean prices. Now, if corn were to loose upwards of 3 million acres the picture starts to change. In this case there very well could a strong rally in corn which would likely bring soybeans along for the ride despite some bearish fundamentals. So, it really comes down to how many corn acres really are lost because loosing 1 or 2 million acres in corn is not as big of an impact on the balance sheets as gaining a million acres in soybeans.
In the near term it is very difficult to predict soybean price action or even soybean price reactions to changes in the weather driven corn market. In the end I believe it all comes down to how many acres are lost in corn. If there enough corn acres lost then soybeans could be a follower on a rally. If the corn acreage lost is significant (which it likely is) but not enough to draw ending stocks below 1.2 billion bushels then soybeans will likely be the leader lower on bigger acreage and stiff global export competition.
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December Corn Daily chart:
November Soybeans Daily chart:
December Wheat Daily chart:
All this means that speculators should be looking for opportunities and producers need to look to lock up some prices while we have corn near $7.00 and soybeans near $14.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or firstname.lastname@example.org
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