Soybean bulls are talking more extreme weather conditions in Brazil: dry conditions in some areas and flooding in others. Bottom-line, the trade seems to be flip flopping on production estimates. Rather than the Brazilian crop getting bigger like many had been thinking (jumping from 90MMTs to 95MMTs), now there is talk that the crop could be getting smaller (perhaps from 90MMTs down to 85MMTs).
Just keep in mind this is still a massive Brazilian crop. A more pressing concern, however, will be the speed at which the Brazilian's can get the crop lout of the fields, to the ports and out of the country. If harvest is drastically delayed in a few key locations due to wet fields and flooding it could perhaps throw a monkey wrench in plans.
Looking Ahead At Prices
USDA is currently thinking ending stocks jump to 285 million next year vs. this years ending stocks of 150 million. Several independent sources believe our current ending stocks are more realistically around 100 million bushels but will jump to over 300 million by next year. This is why the trade keeps talking about new-crop bean prices possibly falling to sub-$10 levels. Keep in mind the USDA is projecting the average farm soybean price at $9.65 vs. their average price estimate last year of $12.70 per bushel and their estimate of $14.40 the year before that. Moral of the story, many folks inside the trade are seeing a darker cloud developing on the horizon for soybeans. Whether it produces a full blown "Category 5" hurricane, with 155+ MPH winds and massive price destruction remains an "unknown"... As it looks right now the storm is building offshore and could reach US landfall by harvest time, depending on what "Mother Nature" has in store for US producers in 2014.