Soybeans remain extremely volatile as the market tries to determine the extent of damage in Brazil along with China's next move. Production in parts of southern Brazil remain in question as many areas experience one of their worst droughts in years. Keep in mind February is the main pod-filling month for the crop. I return there are some whispers that Oilworld and a few other note bale sources might lower their estimates for the Brazilian soybean crop down to 85 million metric tons, much lower than what most had been anticipating just a couple of weeks back. Keep in mind however, even though this is drastically lower than the 90 million metric tons plus that was being forecast it is still stronger than the massive 81 million metric tons Brazil produced last year. The kicker to all of this is that China continues to import soybeans at a record pace. Most sources thinking they purchase more than 69 million tons in 2013-2014, up dramatically from the 59.9 million tons just a year earlier. The problem is I doubt they make this type of jump next year. You can certainly argue they push imports to 71-73 MMT's, but I doubt we see a 15% or 16% jump in imports like we did this past year, that would put them up close to 79-80 MMTs (I just don't see it). With this in mind, producers who have very little if any new-crop priced may want to think about pulling the trigger with prices north of $11.40 vs. the contract. I hate to sound like a broken record, but it still looks as if there could be $1.50 or more of downside risk, especially if producers here at home end up planting as many acres as I think we will (80 million plus planted). There are just too many producers switching to soybeans for us not to see a NEW record in planted acres. CLICK HERE for my daily comments....
USDA sees 2014 soy acres below trade expectations
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