Soybean bulls are talking about a much cooler weather pattern moving across Argentina, which could delay the drying-out process. There's also some talk that the extended forecast shows more rains moving across Argentina following the cool down. Bottom line: There are still concerns and uncertainty about the Argentine exports.
Lets also understand that the political meltdown in Brazil is still extremely hot and doesn't look to cool down anytime soon. The impeachment of current President Dilma Rousseff now lies within the walls of the Brazilian senate. From what I've heard, the vote in the 81-seat Senate is already on track to pass late next month with a simple majority of 45 members currently supporting the impeachment bid, 19 against, and 17 undecided. If the Senate approves the process by a majority, Rousseff will be suspended from office during an investigation that will ultimately decide whether she is impeached. Keep in mind, an impeachment could generate extreme market uncertainty and social unrest as millions of Rousseff’s supporters are likely to hit the streets over a perceived coup. Meaning Brazil’s political and economic health could get much worse before it gets better.
Here at home, the U.S. crop appears to be off to a good start with the USDA reporting 3% of the soybean crop now planted vs. 2% last year and 2% on average. States like Arkansas, Illinois, Iowa, Minnesota and Missouri are all running ahead of schedule. This obviously helps the bears talk more aggressively about U.S. soybean acres increasing beyond what the USDA estimated back in late March.
From a bullish, technical perspective I would like to see the new-crop contract continue to close above the $9.70 level, providing us hope that would could eventually see another nearby leg higher. A close below $9.70 could setup a quick retest of $9.20 and start to bring about more serious concerns of a technical breakdown.
As a producer, I believe I've reduced enough risk at profitable levels on the recent rally to maintain a longer-term "wait-and-see" approach towards marketing more bushels. As a spec I will remain on the sideline and continue to let more of the South American uncertainty settle before pulling the trigger. I feel there's simply too much money rotating back towards commodities to be an aggressive bear. Stay tuned...