Soybean bulls continue to point towards problems with the Argentine crop, particular "wet feet" in the areas that have been experiencing heavy rainfall and flooding.
From what I can see the forecast seems less threatening to the crop in the days ahead, but there's still a ton of "what ifs" in regard to eventual setbacks and overall yield-drag. As for Brazil, the weather seems much more cooperative and offering up little in the way of new bullish headlines. There's still the continued talk about pockets of problems in central Brazil and areas to the northeast that are struggling with dry conditions.
But it doesn't seem to be enough currently to prompt the bears out or to cause the bulls to add to their current length. From what I understand the funds are still net-long somewhere between 90,000 and 100,000 contracts of soybeans. It will be interesting to see how this weeks big USDA data will be digested and how the funds will reposition once South American weather uncertainties are behind us.
From what I can gather most insiders are thinking the USDA data will show another slight increase in last years already record setting soybean yield. As if the whopping 52.5 bushel per acre average yield estimate wasn't already enough to digest. The good news is heavy demand might prompt the USDA to slightly reduce their current U.S. ending stock estimate. Not that we are going to drift to sub-450 million bushels, but perhaps we trim a small portion off the current 480 million estimate.
There also seems to be more talk that the global soybean carryout will also be slightly lower. From my perspective still burdensome but perhaps reason to make the bears pause. The other data that will be heavily monitored will be any adjustment made to the Argentine or Brazilian production estimates. Most sources seem to be thinking the Argentine estimate will be lowered only fractionally in this report as the USDA will be waiting for more detailed and reliable information before making a more serious reduction.
There's also some talk that the USDAs estimate for Brazil might push a hair higher. Net-net meaning there might not be much change at all for South America, and the bulls could be a bit disappointed.
As a producer I continue to keep all hedges in place. As a spec I'm more inclined to build a bearish position on a major rally than buying into any strength.