Soybeans Making Strong Late Push To 'Buy' Acres

March 27, 2012 04:07 AM

What Traders are Talking About:

* Beans making a push for more acres. Soybean futures continue to charge higher amid well-documented South American crop concerns and strong Chinese demand. The result has been a widening of the spread between soybeans and corn. With the new-crop soybean/corn spread at $7.76 3/4 at the suspension of overnight trade, soybeans are making a strong push to attract "swing" acres. But soybeans are also making a push to pick up acres in the South, with soybean prices considerably more attractive than current new-crop cotton prices.

The long and short of it: USDA's Prospective Plantings Report will reflect planting intentions as of March 1. Therefore, the late push to "buy" acres by the soybean market is not likely to be fully reflected in the data. Intentions can -- and usually do -- change.

* La Nina has ended. The Australian Bureau of Meteorology says the 2011-12 La Nina event is complete with key indicators returning to neutral levels. The bureau expects neutral conditions to persist until at least early summer. With La Nina now done, focus will be on how quickly equatorial Pacific sea surface temps (SSTs)rise. A sharp rise in SSTs would indicate a quick transition to El Nino, which would tend to favor a wetter weather pattern for the Corn Belt.

The long and short of it: While La Nina is done, the impacts could linger for 30 days or more. That's why meteorologists will closely watch how quickly equatorial Pacific SSTs rise as that could greatly influence summer weather conditions across the Corn Belt.

* Markets get 'Bernanke boost.' Fed Chairman Ben Bernanke told a meeting of the National Association for Business Economics yesterday despite recent jobs growth, the U.S. economy needs to expand further to create more jobs and drive down unemployment. To achieve that, the Fed plans to maintain its accommodative monetary policy. That rekindled thoughts the Fed may start a new bond-buying program. The potential for QE3 is helping boost investor confidence.

The long and short of it: Bernanke didn't provide any major, new revelations on the economy with his speech yesterday, but the mere fact QE3 is still a possibility was enough to encourage investors.


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