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Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Soybeans traders are watching the MAR14 contract as it technically consolidates just above the $13.00 level (don't forget its "first notice day" in the JAN14 contracttomorrow). The question now is will the soybean market break-out be to the upside or the downside??? The weather has improved in South America and I am hearing that shorter variety soybeans are starting to be harvested in parts of Brazil. Word is producers can currently bank between $200 and $300 per acre on their soybean crop, and this is causing concern that second-crop soybeans will be a much more popular choice than in years past where second-crop corn was the favorite. Keep in mind additional setbacks in the Brazilian real in comparison to the US dollar is also making the Brazilian exports look more attractive. The bears are also talking about the fact weather complications may keep a small portion of the Argentine corn crop from going in the ground, ultimately pushing more acres into soybeans. On the bullish side of the equation the front-end remains insanely tight and Chinese demand extremely strong. The bulls are also closely monitoring the dry-conditions in southern Brazil, where there are still several unanswered questions regarding production. Net-net, the teeter-tottering back and fourth between the extremely tight supply side conditions nearby vs. the fear that a glut of surplus is coming down the pipeline as both Argentina and Brazil harvest a NEW all-time record crop followed up by record US soybean acreage in 2014 continues. Several inside sources still believe old-crop supplies have the potential to reach prices above $13.50, possibly even pushing closer to $14.00 per bushel, but in the same breath will tell you prices moving forward in 2014 (new-crop supplies) could fall to sub-$10 levels. I suspect the next 30-days will be insanely volatile and set the tone for 2014. If the weather in South America cooperates and the harvest starts to confirm a NEW record it will be tough to rally the back-end. Keep your hedges in place. Spec's can continue to entertain bull-spreads on the front-end. Click here for all my daily grain comments....
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