Soybean traders are digesting mixed talk from both U.S. and South American producers. Here at home, there seems to be some conflicting debates about yield and harvested acres. In Brazil there are debates about upcoming planted acreage. One group is saying we are going to see another major jump in planted soybean acres, while others are thinking we could see more producers hit the brakes a bit as operating loans become more restricted and rates continue to increase.
With global demand for soy fairly stable at this level and continued uncertain brewing politically in Argentina and Brazil, I'm going to stay patient in regard to reducing more new-crop risk. From a spec perspective, I like the thought of buying a deep break. I'm just not a big fan of the "risk-to-reward" ratio on the short side right now.
I don't see the U.S. dollar aggressively moving higher; I don't see global demand slowing down all that much from it's current level; I don't see new-crop South American acres getting any larger than the trade is already projecting; and I don't see U.S. old-crop stocks or new-crop production getting any larger.
Bottom line: I think the dollar weakens a bit between now and the next Fed meeting and we might see an unexpected spike in the commodity space. Soybeans could be a surprise winner. There's no real compelling fundamental reason to believe we will bounce during the next 45 days, other than the fact the trade has been beaten down the past several weeks while listening to the same old song...dollar higher, Brazilian planted acres higher, uncertainty in China, etc. I think the market is going to become tired or bored with hearing the same old song. I have to imagine the short-side money might soon find something more entertaining or more interesting to dance to.