Soybean bears are wondering if the cash markets might be telling a slightly different story than the balance sheet bulls are projecting. The bears are also thinking the USDA will revise last years soybean crop higher by some 15 to 25 million bushels. The question the bulls are asking is how much higher will domestic crush and export demand be raised?
From a global perspective I'm not looking for many changes, but there is some talk the USDA might raise their Argentine crop estimate a hair higher. More near-term lets not forget the USDA will issue their first "crop condition" ratings on Monday afternoon. Most sources inside the trade are looking for at least 70% of the crop to be rated in "Good-to-Excellent" condition.
The bears are pointing to the fact, since we are ahead of our traditional planting pace, with nearly ideal conditions, and a record number of acres going in the ground, an oversupply of soybeans is coming right around the next corner. This certainly sounds like "logical thinking," but is this enough to satisfy the market?
Have the rules of stock and commodity markets changed so much that "logical thinking" is no longer enough? Logical thinking is often that which relates to the left-hand side of the brain; the part of the brain that often perceives the parts more than the whole. In other words, logical (or left-brain) thinking comes into its own when we are working with verifiable and reasonably "certain" information.
This is information we can be sure about because it has been confirmed scientifically or mathematically. Using a “defined data set” allows us to develop our knowledge by making logical deductions. It's the kind of thinking used in playing games of chess, (where there are quite definitive rules). I'm not so sure this is the case any longer with today's markets. The so called "rules of the game" have changed to such a degree that we are often left only seeing parts of the whole. Just remember, the definition of "insanity" is doing the same thing over and over while expecting different results.