Is now the time to price soybeans north of $10?

Is now the time to price soybeans north of $10?

Soybean prices broke significantly lower on the heels of less-than-bullish USDA data. We saw a slight bounce Tuesday morning. Keep in mind, however, we've still yet to break outside the $1.00 trading range of between $9.80 and $10.80 vs. the MAR15 contract; price levels we really haven't traded much beyond since mid-October.

The longer-term supply and demand numbers continue to paint an obvious burdensome picture, but the world still seems apprehensive in pricing higher proteins at lower levels. There's still a bit of uncertainty regarding the South American crop, but from what I hear, Brazil is still more than likely going to throw up another record crop. It's just a matter of how big. I'm also hearing the Argentine crop could be a bit larger than anticipated as well.

Moral of the story, if it looks like South America is going to put up record production numbers,  and we follow that up with the expectations that U.S. producers will plant another round of record acreage, the trade might quickly start to anticipate ending stocks pushing back north of 500 million bushels.  If this is the case then sub-$9.50 soybean prices are right back in the deck cards.

As I said prior to the release of the USDA data, "the year-end report certainly has the potential to push this marketn into a longer-term trend." Unfortunately the abundance of bearish data is tilting price lower. Without continuing confirmation of a "weather" story during the next several weeks, this market may find itself hard pressed to hang on to rallies.                

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  • Soybean Yield raised from 47.5 bushels per acre to 47.8 bushels. Increases from last year of more than 8 bushels per acres occurred in Louisiana, Missouri, and Texas. Record high yields occurred in Arkansas, Delaware, Florida, Illinois, Indiana, Louisiana, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, South Dakota, Texas, and West Virginia.
  • Harvested acreage dropped by -300,000 acres to 83.1 million but is still a NEW record and up over 9% form the previous year. 
  • Total US Production was raised from 3.958 billion bushels to 3.969 billion. Remember this is up just over 18% from last year.
  • Exports were raised by just 10 million bushels, to 1.778 billion. The bulls were obviously hoping to see a higher number. Imports were left "unchanged" at 15 million bushels.
  • Crush was left "unchanged" at 1.78 billion bushels. This up slightly form the 1.734 billion last year.
  • Ending stocks were were left "unchanged" at 410 million bushels. World stocks are raised higher to 90.8 MMTs. This is a huge jump when compared to last years 66.2 MMTs. The problem is global demand is expected to only increase by 5%.
  • Brazil's soybean crop production was actually raised higher from 94.0 MMTs to 94.5 MMTs. Argentine's production estimate was left unchanged at 55.0 MMTs.
TAGS: Soybeans
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