Soybeans Will Struggle To Find Traction

February 12, 2013 12:25 AM

What Traders are Talking About:

* Brazilian harvest pace to quicken. After weeks of rain that have delayed harvest efforts, skies are clearing across central Brazil. Forecasts call for warm and mostly dry conditions, which will lead to a quickened harvest pace. Meanwhile, rains are forecast for southern Brazil through the weekend, which should give the crop a boost there. In Argentina, very little rain is in the outlook ahead of the weekend, but there's a rain event forecast for Saturday through Tuesday. Key will be how this system develops as recent rain events have repeatedly been disappointing.

The long and short of it: If South American weather concerns dissipate, it will make it hard for soybeans to generate more than modest corrective buying interest as demand news is waning. China is on vacation this week and the country's appetite for U.S. soybeans will ease once South American supplies are available.

* State of the Union address tonight. President Obama is expected to focus on jobs, a call to avoid the March 1 across-the-board cuts (sequester), a push for comprehensive immigration reform, continued support for renewable energy and additional action regarding climate change. Gun control will also very likely be addressed.

The long and short of it: Few market-moving nuggets are expected to come out of the president's address tonight, though his comments renewable energy will be monitored closely.

* USDA issues long-term projections. On Monday, USDA released its long-term ag projections through 2022. For 2013-14 corn, USDA projects plantings to decline to 96 million acres and yields to recover to 163.5 bu. per acre. This would result in a a record crop of 14.435 billion bu. and carryover would rise to 2.067 billion bushels. For 2013-14 soybeans, USDA projects plantings will decline by 1.2 million acres from last year to 76 million and for the national average yield to recover to 44.4 bu. per acre. This is would boost production to 3.335 billion bu. and push ending stocks to 185 million bushels. For 2013-14 wheat, USDA projects plantings to 57.5 million acres, the national average yield at 45.2 bu. per acre and a crop of 2.190 billion bushels. Carryover is projected to rise to 733 million bushels. Click here for the full 10-year projections.

The long and short of it: Keep in mind, these are long-term projections that are used for budgetary purposes. These projections get WAY more market attention than they should.


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