Soybean bulls remain optimistic in regard to a possible producer tax-credit coming down the pipe for biodiesel. They are also hoping U.S. exports can repeat this past weeks stronger than expected performance and close the gap a bit more in regard to total export sales.
As of right now, we are still trailing last years commitments by about -15%. With geopolitical uncertainties in Brazil, will the Chinese importers look to the U.S. for a more stable supply chain to fill their needs?
Globally, the bulls continue to keep a close eye on weather in Brazil. There's talk form inside the country that areas to the north and northeast are too dry, while several areas to the south are having problems with too much moisture. Also interesting is the fact the newly elected Argentine President seems to be wavering a bit on how he will proceed with monetary policy. Initially there was a lot of talk that he would immediately work to devalue the Argentine peso, now that might not happen as quickly as some were projecting.
The bears continue to point toward weak soymeal prices, weak crush and a U.S. soybean carryout that could eventually push toward 550 and 600 million bushels. There's also now some talk that the Chinese Yuan may fall under more heavy pressure against the U.S. dollar in the weeks ahead, ultimately causing more head winds for U.S. exports. This is obviously something we will continue to monitor. It's certainly a looming area of concern considering China is by far our largest buyer of soybeans.