Soybeans Pose Greatest Chance for Price Pop

September 9, 2017 05:30 AM

The trade was blindsided by the U.S. Department of Agriculture’s (USDA) August crop production report, with numbers coming in well above the average trade guess. So, what could be in store for USDA’s next report, scheduled to be released September 12? Pre-trade estimates coming in at an average yield of 168.2 bushels per acre, which would be a slight adjustment from USDA’s 169.5 bushels per acre forecast. The trade guess for production is 14.03 billion bushels, down from USDA’s August number of  14.15 billion bushel.  The trade also thinks USDA will shave less than a bushel from the national soybean yield, with the average guess pegged at 48.8 bushels per acre, down from the 49.4 bushels per acre August estimate. Analysts on U.S. Farm Report say be prepared for a mixed reaction after Tuesdays’ report.

“Soybeans have the best opportunity to pop if we get a smaller crop, because the demand is so strong,” said Arlan Suderman, INTL FCSTone. “I'm not bullish on the grain and oilseeds, but I do like the money coming back into the commodities, and we can appreciate prices over the coming years as more money comes into the commodity sector.”

Suderman express hopeful sentiments, but Alan Brugler of Brugler Marketing says no matter numbers USDA throws out next week, expect volatility over the next year.

“You need to remember the market is not a hockey stick, it's a pogo stick; it doesn't just go down and lay there when we have these big supplies, it moves around,” said Bruger. “You should expect a trading range of about $1 a bushel over the next 12 months with corn, and you just have to take advantage of the opportunities.”

Don Roose of U.S. Commodities thinks based on the government’s signs with recent report, the market could be in for a repeat in trading patterns from what producers saw last year.

“When you look at this next year, remember the government's telling us that next year is going to look very much like last year did,” said Roose. “Make sure you analyze the carries that we have in the corn and soybean market-probably try and merchandise yourself out of the market rather speculate yourself out of the market. There are opportunities with the carries in the market.”

You can watch the full marketing discussion on U.S. Farm Report

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