Build a long-term bullish strategy for soybeans

Build a long-term bullish strategy for soybeans

Soybean bears continue to point toward a fresh NEW record yield being harvested here in the U.S., eventually moving beyond 47.5 bushels per acre. There's also more heavy talk among the bearish crowd that the Argentine presidential election is swaying more toward the conservative challenger Mauricio Macri. If you recall, Macri promises, if he wins, to undo many of the policies that were put in place by current and controversial president Christina Kirchner, including the heavy tax and tariffs that were placed on soybeans, wheat and corn. There's also talk that we could see a heavy devaluation of the Argentine currency and in turn more aggressive and ramped up farmer selling. The new president may also bring enough optimism to the country that he encourages producers to plant acres they may not have intended to plant? The election is just a couple of weeks away on Sunday, November 22, so continue to pay close attention.

The bears are also talking about weaker soymeal prices and U.S. exports sales easing a bit on the heels of less demand out of China. I personally don't see this as a major demand concern, but it is providing the bears with a bit more nearby firepower, hence the recent move in price toward the lower end of the range on the charts. Most "technical" gurus continue to keep a close eye on the $8.50 to $8.60 range, sighting it is an area of major technical support. I suspect if we close below this area, we could see a much more problematic break in price.

The bulls continue to talk about "no guarantees" in farming, meaning just because South America is planting another record crop, that doesn't ensure record production will be harvested out of the field. There's also a lot of geopolitical uncertainty brewing in Brazil that could create complications as well. In fact, there's talk of a trucker strike earlier next week. It's doubtful it will create any major hiccups at this juncture, but it continues to prove the uncertainties inside this space.

As a producer I'm staying patient. As a spec, I like the thought of building a longer-term bullish strategy on a break to the low end of the range sub-$8.50 per bushel.  

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