Soybeans, similar to corn see crop-conditions left "unchanged" at 71 percent rated "Good-to-Excellent."
This is a whopping 9 percent above the rating given to last years crop which produced a record setting yield of 48 bushels per acre. Soybeans "setting pods" were reported at 35 percent vs. 29 percent last year vs. 26 percent on average; Soybeans reported as "blooming" are reported at 76 percent vs. 67 percent last year vs. 66 percent on average.
Bottom-line, the trade doesn't see much reason to be concerned as long as the rains come as forecast the next few weeks.
The bears continue to question "demand" as prices have broken by well over -$2 per bushel while demand for U.S. supply has not gained any additional interest.
The macro bulls have also aggressively backed out of the trade as the U.S. dollar shows renewed strength and crude oil prices trade back down to levels not seen since mid-April. To put it simply, the commodity bull has again given the market a head-fake and moved back to the sideline.
As I mentioned a couple of weeks back, it's going to be tough to rally prices as all three major bulls move to the sideline: The "supply-side bulls" are liquidating as U.S. weather appears to be cooperating enough to rebuild the balance sheets. With the U.S. producer planting a fresh new record number of soybean acres, along with weekly crop-conditions among the best we've seen reported in years, it's tough to currently argue any type of price rationing will be seen nearby.
I suspect the supply-side bulls could quickly re-enter the market if weather starts to bring about talk of a sub-45 bushel per acre yield. But if that rhetoric never arises, I have to imagine the supply-side bull simply stays on the sideline until more uncertainty and questions are raised regarding the upcoming South American crop, i.e. total number of acres they will plant in Argentina and Brazil or complications in getting the crop in the ground.
The "demand-side bulls" have been willing participants in the rally up to this point, but there is some fear and a lot more talk as of late that the headlines simply won't be able to keep the demand-side bulls fed. In other words, while demand has been strong, the trade might have gotten a bit ahead of itself.
The other major bull that helps push prices higher is the "macro-bull."
Unfortunately, the "macro-bull" has also moved to the sideline as the U.S. dollar has showed renewed strength and oil prices have again fallen under pressure as world economic growth is being more heavily questioned.
Bottom-line, we just don't have a lot of bullish horsepower in the market right now. Yes, there remains some uncertainty in regard to the U.S. crop, but based on the current forecast and movement of soy in South America the "supply-side bulls" now appear most comfortable taking shelter on the sideline.
This apparent triple-liquidation and movement to the sideline by the "supply-side", "demand-side" and "macro" bull is simply too overwhelming for the market and provides the bears with all the momentum.
Personally I don't see the "demand" or "macro" side of the story changing within the next 30 to 45 days. That leaves most all of our upside potential in the hands of weather here in the U.S. and the availability of bushels out of South America.
As a producer I recently bought back and banked the profits on another small sale that I had made on the rally against my estimated 2017 production. I still have 80 percent of my new-crop 2016 production priced at much higher levels and have yet to re-own any of these bushels.
From a spec perspective, the market looks extremely intriguing, but as I've learned on several occasions in years past, it's extremely difficult trying to catch a falling knife. Therefore, I'm staying patient and on the sideline until I start to see the market find more stable footing. Based on the extremes of the current price action I think thecontract eventually tumbles to between $9.20 and $9.50 per bushel.