Can Bean Bulls Keep Pace with Corn and Wheat?
Apr 30, 2014
Soybeans have climbed back to near-term highs but in my opinion, at least longer-term, appear to be much less bullish than their cousins corn or wheat. Meaning if I had to be short just one contract or one market, it would have to be new-crop soybeans. I know I sound like a broken record, and the fact new-crop beans have rallied over $1.50 since the end of January and just posted their highest close in 10-months, makes it even tougher to swallow, but I continue to fear a major setback is around the next corner for new-crop soybeans. I have explained the reasons why time and time again but here are few of the biggies:
- Record US soybean planting, possibly even more if the corn is delayed in some areas like many are anticipating.
- Improved SAM logistics and another increasingly large crop just harvested.
- Questionable Chinese demand. We talk about this every year at this time, but it feels somewhat different as bird flu problems persist as well as major issues in pork production.
- US imports of South American soy on the rise. Many in the trade are now talking about 80 million plus of soybeans being imported along with more than 1 million tons of soymeal. Boats are on the way! CLICK HERE for my daily report.....
Old-crop remains a different story. In fact I still don't think you can rule out $16.00 soybeans. Would I be willing to gamble waiting on higher prices if I had old-crop beans left? Absolutely Not! Would I be a buyer of flat-price beans on the board in the front-end of the trade? Absolutely Not! But that doesn't mean prices can't still go another $1.00 higher. The way these markets now trade, $1.00 in the front-end of the soybean market is nothing. In fact it's going to be the NEW one day price limit starting tomorrow. Be careful, as I suspect someone will want to test the waters sooner rather than later. My next round of new-crop sales targets are now at $12.54 and then $12.80 respectively. I continue to warn spec's about trying to pick a high in the JUL/NOV spread as it remains extremely dangerous. CLICK HERE for my daily report....