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Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Soybeans continue to be a major concern, as the market will soon start talking about the plants aborting pods. Soybean bulls are also pointing out the fact not only is the yield a concern but so are "harvested acres." There is some talk in the trade that soybean harvested acres could be cut by 300,000 to 700,000 in the blink of an eye. There is also some talk that planted acres could be too high as well with many producers simply unable or unwilling to risk throwing the beans in the ground considering the hot, dry conditions. I still see an impossible soybean balance sheet situation moving forward and believe the current USDA numbers simply do not recognize the global "demand" situation. The USDA obviously believes the higher prices will drastically curtail the demand, but my question is how high will prices have to go before we see this happen $18..$20..$22...or possibly even higher??? Who knows right now. What I can tell you is that not only will China be exclusively importing soybeans form the US in a couple of months but so will South America. Tell me then how the balance sheets will look and if "demand" has tapered off. The soybean situation is serious and becoming more serious by the day, August rains or no August rains we are going to eventually run out of supply. How we get to these higher prices still remains a mystery, but it wouldn't surprise me to see some profit taking in the next few weeks, followed by another round of rallies in the late summer to early fall time period. Remember, this soybean rally is going to end up being a "demand" driven market. I have learned through the years "demand" driven markets almost always give you a chance to get back in on the breaks so be patient and do NOT chase the rallies. Producers can entertain buying puts with the thought of trading them rather than holding them. Simply meaning to buy your puts for protection just in case of a major break, but be willing to liquidate them and bank the profits before prices turn back around and move to higher ground.
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