Soybean traders continue to juggle several balls. Below are a few of the main debates currently taking place between the Bulls and the Bears: The question we all want to know as producers is will the Bulls be correct in thinking that prices move back up closer to $13 nearby before tumbling in 2014, or are the bears correct in thinking the race is now on to push towards the Aug lows set back at $11.69? For what its worth I am siding with the "Bulls," and continue to believe there is still another round of price appreciation coming our direction.
Global Supply (Bullish) - Exportable global supplies are without a doubt extremely tight right now. There are actually many traders questioning if the US is going to have enough soy supply to meet overall global demand. In fact some are speculating that the US may eventually end up needing to import South American soy next year as supplies become depleted.
Global Demand (Bullish) - Obviously strong demand is keeping prices in the front-end of the trade well supported. Yesterday's weekly export inspections were once again better than expected. The concern is that just 7-weeks into the marketing year we already have over 85% of the USDA's total export estimate sold. Normally we would have about 50% of the USDA's export estimate sold at this juncture. Bottom-line we are running well ahead of pace.
US Production (Bearish) - There doesn't seem to be anyone left in the game who thinks the US soybean crop is getting smaller. In fact some analyst are projecting a NEW all-time record yield north of 44 bushels per acre. I know this sounds extreme, especially when you consider the fact the USDA is currently estimating the yield at 41.2 bushels per acre. Unfortunately at this juncture we still can't rule it out of the realm of possibility.
South American Production (Bearish) - Brazil is thought to already have over 50% of their record soybean crop in the ground and is now running ahead of schedule. Insiders are saying the top soybean production state of Mato Grosso is closer to 75% planted (about 10% ahead of pace). Keep in mind recent rains have also vastly improved planting conditions in Argentina. Bottom line, an additional 10-15 million metric tons of soybean production could soon be coming out of South America.
Get my free trial now so you don't miss the USDA WASDE report Friday morning...should be a big one. Click Here