Between the positions of managed money and the uncertainty of summer weather, some analysts see significant downside risk for soybean prices in the months ahead after last week’s market correction.
“The funds are very long,” noted Andy Shissler of S&W Trading, speaking on U.S. Farm Report. “You look at what corn did—we traded new lows for the year. Wheat did substantially the same thing.”
He, like so many others, is also watching the weather and the market’s reaction. “If they put in a rain in after that heat system, then I think beans could go down to $9.15 on the board,” Shissler said. “If it stays dry, there’s a gap at $11.20 that we could take a run at. But I don’t know that we exceed $12 unless it’s really dry.”
Bob Utterback of Utterback Marketing Services expressed a similarly bearish outlook for soybeans, particularly for producers still holding old-crop beans.
“Get the calendar out, and for the next four weeks, sell one-fourth every Friday,” said Utterback, who says $11 to $11.20 soybeans is a price worth taking. “Get rid of it, because the acres are there and it’s all weather now.”
Low corn prices could also put pressure on beans as the summer progresses. “If corn stays between $4 and $3.50 and we keep the ratios between 2.5 and 2.7, the $9 beans is your risk,” warned Utterback, alluding to the corn/soybean price ratio.
“If you can’t sell the cash and you can’t sell the board, then buy a put,” he said. You’ve got to at least get something down to protect yourself because I think beans will realign themselves with corn” in terms of prices.
In the short term, of course, Shissler and Utterback will also be monitoring the market response to Tuesday’s USDA release. While the soybean numbers could be a little friendly, according to Shissler, the corn figures will probably be bearish, given the potential bumper-crop combination of updated acreage numbers and trendline yields.
But the impact of the numbers that will be released Tuesday is expected to be quickly absorbed by the trade.