Will the USDA Play its Bullish Cards?

Published on: 08:38AM May 08, 2014

Soybean bears have been taking large swings at old-crop beans, in return heavy bull-spread unwinding and more serious "technical" damage has taken place the past few days on talks of greater "imports." In fact the bears have peeled close to $0.70 cents off the JUL14 contract (from last week's high) in just the past 6-days. From what I hear imports are now most certainly going to end up being at or above 80 million. Not only are soy supplies coming in from Brazil and Argentina at a brisk pace, but as I indicated yesterday, there is talk that we could eventually see 35 to 40 million bushels of soy drifting down from our neighbors in Canada. The question now is HOW will the USDA elect to lay their cards on the table? Will they play only their bullish cards, like increased exports and or increased crush? Will they hold back some of their more bearish cards, like increased Brazilian production, decreased Chinese imports, increased US imports or underestimated old-crop production? In other words, will they lay ALL of their cards on the table or hold a few back until the next report in June?  Regardless of how they elect to play out their hand, I'm waiting to be a seller of additional new-crop beans. I continue to have my next sales target set on prices just north of $12.50 vs. the NOV14 contract.  It might take a bit more time to play out, but I continue to struggle with both a massive jump in acreage and the optimistic projection of a NEW record national yield.  It's just hard to imagine hitting such a massive soy home run with "Mother Nature" already throwing wild-pitch after wild-pitch...  

Better than expected Chinese data has given the soybean market a bit of a reprieve. Official customs data showed was soybean imports of 6.5 million tons last month up from 4.62 million tons in March.  It will be interesting to see if old-crop beans (JUL14) can stay above nearby support at $14.20 and if new-crop beans (NOV14) can keep their head above the $12.10 area. CLICK HERE for my daily report...