Weather bulls continue to talk about the hot, dry weather in parts of Argentina, southern Brazil and Paraguay. The question is: Will it be enough to reduce soil-moisture levels and cause yield loss? From my perspective, since it is the "first" real weather story out of South America its being a little over-hyped. But couple a few weather realated stories out of Brazil and Argentina, with any type of a further issue with the potential of yield loss from the infestation of the Helicoverpa caterpillar, and the supply side bulls will be pushing prices higher.
Also, soybeans continue to teeter on the edged of insanely tight and a glut of supply. With Chinese demand so strong, one can easily argue just the slightest production hiccup or logistical disaster in South America and prices skyrocket higher. U.S. ending stocks plummet to levels at or near 100 million bushels and more serious price rationing is need.
On the other side of the equation, if South American weather holds up and infrastructural improvements actually help get the beans out of the country quicker than in the past, then current price levels could be grossly overstated. I know it sounds crazy, but as of right now this market could honestly tip in either direction. Producers should keep their hedges in place and hope a couple of bullish headlines give us an opportunity to reduce more risk at higher levels.