Don't reduce soybean price risk just yet

Don't reduce soybean price risk just yet

Soybean conditions have taken a step backward, with the largest negative changes happening in Illinois, Indiana and Ohio. If we look back 30 days, the entire U.S. crop has gone from 67%  good-to-excellent condition down to 62%. The Illinois crop has gone from 70% down to 48%; Indiana has gone from 71% down to 42%; Ohio has gone from 69% down to 42%;  Michigan from 71% down to 60%; North Carolina has gone from 69% down to 63%; Missouri from 34% down to 32%.

On the flip side we have seen improvements in Louisiana going from 50% to 71% good to excellent; Mississippi from 66% to 74%; Minnesota from 74% to 78%; Nebraska from 68% to 71%; Tennessee from 68% to 78%; South Dakota from 68% to 76%; Arkansas from 55% to 61%; Kansas from 43% to 48%. I should also point out the top-end has come down just a bit in some of the states with the best conditions, but keep in mind they are still historically very good: Iowa from 80% down to 78%; Kentucky from 81% down to 78%; North Dakota from 83% down to 80%;Wisconsin from 86% to 82%.

Still if you want to compare the eastern belt woes to that of 2012 we are no where close. By mid-July of 2012 Illinois soybeans were rated just 17% good to excellent; Indiana 11%; Ohio & Michigan each 22%.

Traders today will be digesting the latest NOPA crush numbers. Most of the bulls are looking for another round of near-record monthly demand. As for overall planted acreage, most inside the trade believe between Illinois and Missouri there's about 1.5 million soybean acres still unplanted. If you want to push those thoughts one step further and include unplanted, non-emerged and fields in poor-to-very-poor condition, you're talking somewhere between 10 and 11 million acres in jeopardy. Throw on top heightening weather concerns in India and talk of perhaps better-than-expected Chinese demand, and we continue to have more upside risk than downside. As a producer, I want to let things play out a bit longer before reducing additional price risk. From a spec perspective there seems to be more talk about bull-spreading.  

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