Sep 16, 2014
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Current Marketing Thoughts

RSS By: Kevin Van Trump,

Kevin Van Trump has over 20 years of experience in the grain and livestock industry.

China Concerns Trump Bullish Bean News ...

Mar 12, 2014

Soybean bears pressure the market in the overnight and the front-end is now some $0.80 cents off it's recent high. The biggest concern is obviously China! As I mentioned in the opening comments, the larger fund traders are becoming more concerned about the overall health of the Chinese banking system and it's economy.  In return Copper, Crude Oil, and Soybeans (the big three) are being hit fairly hard. We can debate  the rumors of China canceling some 15-20 cargoes of Brazilian beans, but this is a bigger longer-term concern that is starting to spook a few. If your a bull you can easily argue that China is canceling Brazilian beans as opposed to US beans because of "quality" concerns. It seems as though the heavy rains as of late have caused some more serious issues in Brazil, especially in regard to overall quality.  The other bullish debate being raised is the overall size of the South American crop. As it stands right now the USDA still has the South American crop coming in some 10 million metric tons larger than last year.  Oil World, who is a respected source in the industry, is estimating the South American crop at about 5 million metric tons less than the USDA. In other words there seems to be about 5 million metric tons in question right now.  From my perspective this debate may linger on for some time as the weather remains highly unpredictable in South America. But we can't loose sight that both sources are predicting a much larger crop than last year.  More predictable right now is the bearish argument and the fact the Chinese crush margins continue to plummet. Several  sources thinking they maybe negative by some $50 per ton in many locations. There is also concern that as the US crush margins continue to pull back beans being imported from South America become a much more viable option.  As of right now it still doesn't really pencil to import beans into the US from South America, but as the levers start to move and the dynamics shift it is certainly looking more and more like a legitimate offer.  Bottom-line, the concerns in China seem to be trumping all other fears. Producers who have gotten greedy may end up paying the price... CLICK HERE for my daily report.....

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