What bullish wild cards are left for the soybean market?

Soybean traders continue to aggressively doubt the balance sheet. The bulls are saying despite the USDA forecasting a new record number of soybean acres being planted, 83.7 million, we could still be looking at ending stocks sub-200 million. In fact some analyst are talking about ending stocks being near "zero" if the average yield simple falls to 45 bushels per acre. Which is a very real possibility considering the threat of La Niña is still brewing and the rains may disappoint into late-July and August. Despite the fact prices nearby may be pressured lower on improved rainfall amounts and better forecasts, as we saw a limit down move in beans today but there seems to be more sources inside the trade now talking about how soybean prices could push to $12.50 or perhaps $13.00 per bushel in the next 90-days. Demand remains extremely strong and U.S. production still a "wild-card". As a producer, I want to remain patient in regard to reducing any additional price risk. As a spec, I still feel there are only two choices, either remain on the sideline or play exclusively from the bullish side of the fence. I see no reason in trying to get tricky by shorting this market.

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Corn/Soybean Ratio

It's worth noting that the corn/soybean ratio has recently traded to levels not seen in over a decade and several inside the trade suspect it could move even wider, perhaps 1 to 3.5. Meaning corn perhaps at $3.50 per bushel and soybeans at $12.25 per bushel or possibly corn at $3.85 and soybeans near $13.50 per bushel, obviously depending on late-summer weather. Keep in mind, just last week NOV16 soybeans rallied by almost 60 cents while DEC16 corn fell by 27 cents. 

TAGS: Soybeans
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