Should you be protecting your upside in soybeans??
Sep 06, 2013
Weather & Soy yields here in the US remains the big question. Not so much rainfall totals moving forward (because I think its too late), but rather what type of damage has already been done??? We continue to get report after report in the office from producers who are having a tough time with beans. Some areas have definitely seen some slight improvements the past few days, but the situation and potential lack of yield certainly has my attention. In fact buying cheap out-of-the-money calls might be a smart play for those who are worried about their production or the fact they could be "oversold." Talk to your individual advisor about specifics. I have just learned through the years at some point, despite what the numbers are telling us on paper, we have to stop and listen to what the market is trying to tell us. The past couple of weeks this soybean market has been jumping up and down screaming that there's potentially a big problem brewing. I certainly can't guarantee a low yield number will be reported by the USDA, in fact they may move the goal post for all I know. But I can tell you, from what I am seeing and hearing out in the field, we could end up having a hard time exceed last years yield of 39.6 bushels per acre. I know that may sound extreme to some, especially considering how bearish I was just a couple of months back. The lack of rain in August is no longer a "what if"...it's in the history books and it isn't pretty. I heard yesterday that IA, IL, IN, and IA received 1.72", 1.38", and 2.49" of rain since August 1, compared to 3.19", 6.19", and 5.73" over the same period last year. In fact Chicago's 4.05" since Jul 1st is the driest in some 37 years! Keep in mind there is very little rain in the forecast through the weekend either. Bottom-line, despite the S&D's its tough to be overly bearish this market when we know how important the Aug. rains are to the US bean crop.
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