After May’s surprising USDA soybean report showed higher demand than expected, the bulls have some work to do.
“Can they prove it?” asked Bob Utterback of Utterback Marketing Services on U.S. Farm Report. “Just last week, the exports in beans aren’t up to snuff. The markets are starting to say, ‘well, you’ve got (this demand) projected and now you’ve got to prove the case.’ That’s going to be a problem for the beans.”
Utterback isn’t the only analyst with reservations after last week’s rally pushed soybeans close to $11.
“I think we’ve overdone it considerably in here,” said Mark Gold of Top Third Ag Marketing, also speaking on U.S. Farm Report. “The report was certainly friendly. Are we going to increase exports 175 million? I doubt it. … We’ve got the dollar on a 2- to 3-cent rally here, so I don’t see that it’s going to last.”
At the same time, prices of $10.64 for July soybean contracts and $10.55 for November contracts are welcome news to growers.
But farmers can’t afford to get too comfortable, given all the forces at work.
“As I’ve said so many times, we want to take advantage of the funds before they take advantage of us. If there’s anything shakes this market out, those funds are coming back out of this market,” said Gold. “This is a great time period to be selling beans, buying puts (and protecting) this downside. If we start closing higher next week and take out this week’s highs, then maybe we’ve got something going. But I’m a betting man, and I’ll bet that these highs hold maybe until the end of June, (when) we get the next Acreage report.”
Listen to their discussion, including their advice on whether farmers should be selling calls to buy puts (quick answer: no) and how the corn market is responding to these soybean moves.