Soy continues to debate whether the US is going to soon be "Sold Out" of available soybean supplies or will the Chinese make cancelations and switch to South American suppliers? The trade is obviously concerned about the stories circulating in regard to the Chinese reselling cargoes of US soybeans. Remember, we haven't seen the USDA announce any NEW 2013/14 soybean sales to China the past few days, just the 2014/15 announcement. Kind of makes you wonder if China has turned the page? There is also starting to be some concern and whispers that the Argentine government has or may be wanting to reduce their export tax on soybeans. Thoughts are the Argentine government desperately needs income, and with export taxes so high producers have become very reluctant to let go of their bushels. By reducing the tax the Argentine farmers might let loose of the stranglehold they have on the soy supply. This in turn would obviously put more global supplies in play and take some of the pressure off the US. Ultimately meaning prices could ease to some degree as the market relaxes a bit on the access and availability of Argentine soy. Remember, it has been the meal market that has primarily fueled the front-end bean rally. You had the political complications and raging inflation in Argentina promoting producers to hold back their soy supplies. Simply put they were making more by "holding" the bushels than by selling the bushels. Then in Brazil there was the big logistical shift to exporting corn rather than soy or meal. Hence the US has been forced to be the main supplier. With our domestic demand fairly strong and US exports in high demand as well, processor and exports have had to somewhat fight over the available soy bushels. Therefore prices have remained inflated. Just understand, if one of the legs above crumble then the whole house of cards will come tumbling down. Don't forget Goldman and crew will be starting their big roll out of the January bean contract and in to the March today. Historically, the roll has caused some pressure on the bull spreads so be cautious. Click here for all my market comments....
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Soybean Debate: China Cancellations vs US "Sold Out"