Two Factors To Create "Explosive" Soybean Market

October 31, 2017 01:48 PM

There hasn’t been a lot of action in the soybean market, and some analysts are talking about a potential bull run that could come down the pipeline.

Chip Nellinger, risk management consultant and futures market specialist with Blue Reef Agri-Marketing, Inc., is seeing some possible strength in the market to carry producers through winter. He’s looking ahead to the next USDA crop production report for something to spur the market, which will be released Nov. 9.

“I would expect that the USDA could cut [soybean yields] just a little bit more,” he said. “I’ve been wrong on corn so far, but a lot of producers are finished with beans.”

From what he’s noticed, yields on soybeans planted later in the season in dry areas are tapering off.

“It’s not a disastrous bean yield by any stretch, but our demand is so strong that just a half a bushel, three quarters of a bushel cut and any flare up in the South American growing season…it could be explosive,” said Nellinger.

Meteorologists are calling for La Niña conditions in South America that could bring hotter and drier conditions to Brazil, which would benefit U.S. markets.

“The funds would have a lot of room to add to their long position in beans, and I think they’re searching for an excuse to be bullish on something and put a lot of money to work,” he said.

Hear when Nellinger thinks this could all take place on AgDay above.

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