Soybeans Remain the Story !
Nov 27, 2013
Soybeans remain the story! At least the nearby contracts, especially, DEC13 Meal which made a massive push yesterday to close back above levels not seen since mid-Sept (essentially a NEW contract high). As you know, I have been a big proponent of bull-spreading the front end of the meal market and the past several sessions have paid off handsomely. I made some adjustments yesterday as we scaled back our exposure on the rally, but I still believe there could be more upside potential as supplies remain insanely tight as not only are exports strong but domestic end users still need coverage in Dec and Jan. I should point out there are starting to be some whispers about potential deliveries in meal in light of the explosive move higher, if your in the DEC13 contract don't forget Friday is "First Notice Day." Also keep in mind the bull-spreads rallied despite the USDA announcing a cancelation of 300,000 metric tons of soybeans to China. Remember, the part of the equation that is difficult to solve right now is the nearby front-loaded demand. The market has very little concern or fear of fulfilling the deferred sales. Thats why I continue to stress the importance of scaling back risk exposure on each and every rally... we just don't know when the nearby equation is going to be solved and the market is going to stop worrying about tight supplies. As far as 2014/15 prices are concerned, there continues to be very little in the way of bullish headlines. A few bulls are trying to stoke the flames by talking about the severity of "corn ear worms" in Brazil, but I am just not confirming any reduction to yields or overall production. Yes, producers are having to spray more aggressively but they seem to have the problem under control, at least for the time being. Bottom-line, several good sources continue to believe a NEW record 90 million metric ton plus soybean crop out of Brazil is well within the realm of possibilities, especially with the good rainfall amounts they have been seeing. Keep in mind the USDA already has them penciled in at 88 million tons compared to the 82 million they produced this past year.
Marketing Your Soybeans: In a nutshell I still think there is some more upside potential for the bushels we just harvested. We made another cash sale overnight, making this three in the past week. I am not suggesting producers get greedy, as I have been a huge proponent of scaled up selling the past few months. And understand I am certainly not willing to bet any more than 10-15% of my overall production on the hunch this thing goes higher, so either make catch up sales or get some hedges in place on the reming portion. I just think during the next 30-45 days .... Click here for all my daily comments...