Soybeans bears who have been long-term shorts are starting to readjust their thinking. In fact I'm starting to hear more veteran traders have moved their "harvested acreage" and "yield" estimates lower. There are also more traders moving their new-crop ending stock number south of 350 million bushels.
As I pointed out a couple of weeks back, the soybean story has become much sexier than it was in late May and or early June. Not only is U.S. weather more of a concern, but there is also more talk that the USDA may have overestimated last years production. In a nutshell, the overall market composition was clearly caught off sides. Now we are watching the shorts try to swim to shore ahead of the USDA and U.S. weather uncertainties that could create a major undertow. For now I'm going to stay patient, hoping we see the USDA or the U.S. weather forecasters provide us with more bullish momentum.
Corn trades back to $4 per bushel as traders continue to debate U.S. production. The bulls report too much moisture in many locations is causing shallow root systems and loss of nitrogen. The bears continue to talk about the possibility of the USDA delivering a couple of bearish blows in the form of increased planted acreage and record setting quarterly stocks. In fact theres starting to be a bit more talk inside the trade that the USDA may find a few more old-crop bushels.
The name of the game however remains U.S. weather! I suspect as long as the forecast continues to show heavy rains across many portions of the Corn Belt over the next few days the bears will remain uncertain about total production and take a couple of steps backwards.