Soybean traders continue to do the "Soybean Shuffle"...a few steps forward and a few steps back. Strong exports sales again this week have most analysts thinking we already have about 90% of what the USDA is projecting on the books just 10-weeks into the marketing year.
The question, however, by the bears remains: How many Chinese "cancelations" will we digest in 2014? There is no question, demand is strong and supplies are tight right now, but with South America planting a record number of soybean acres the bulls have to be seriously worried about the shelf-life of $13 beans. On a positive note, and as mentioned, parts of South America are starting to report more problems associated with heavy rainfall. Insiders are reporting that producers are using rotary harrows in an attempt to spark seeding emergence. If the harrowing doesn't work, many producers will be forced to replant these acres possibly pushing harvest back even further.
Along with the rain and potential rust problems, there are also starting to be more headlines out of Brazil in regards to an unprecedented invasion of the Helicoverpa caterpillar or more commonly known as "corn ear worm." Due to some of the insecticide limitations this pest has not been addressed like they should have been and the potential to harm corn, beans and cotton is starting to be debated. From what I am hearing, the Brazilian government has stepped in to allow chemicals that have not been previously approved to be applied immediately to help control the insect. As of right now our sources are telling us the pest problem is NOT a major concern, but it is certainly starting to pique some interest.
Remember, its all about how the puzzle pieces fit together with Chinese demand and early South American production. If the Chinese can source a large number of beans out of Brazil by mid to late-Feb global supplies could get extremely tight and prices would need to strengthen to ration demand. I am going to continue to hold our remaining 20% in hopes of both a flat-price rally and a stronger basis. There continues to be good river and port demand for beans, and some areas are starting to report the basis and freight heating back up, with many buyers requesting delivery dates before beans have been shipped.
Seems like available beans supplies are starting to dry up in many parts of the country. Again, just like corn, be ready to play your cards quickly over the next few weeks our marketing opportunities may come and go quickly. I hate to keep harping on it but 2014 and 2015 are still making me nervous!