Soybean, similar to corn, appears content trading in a sideways channel. Keep in mind, prices have traded between $8.60 and $9.20 per bushel since late August and don't seem like they pose any immediate threat of breaking out in either direction.
The bears continue to talk about yields in the U.S. being better than expected, a meal market that seems to have lost it's leadership role, and now recently improving rainfall forecasts for dry areas in Brazil. Don't forget, the bears are also talking about another round of increasing record acreage for South America and perhaps a slight increase in soybean acres here in the U.S. next year.
The bulls, on the other hand, are obviously pointing to "unknowns" associated with weather, extreme geopolitical risk floating around inside Argentina and Brazil, and what appears to be very strong soy demand still coming from the Chinese.
From my perspective, neither team seems capable of of controlling the line-of-scrimmage, so the game will more than like continue to be played between the 20s. Meaning, neither the bulls or the bears have the headlines to push ball into the red-zone and threaten a score.
The bulls now have "weather fear" on its side, at least until more certainty is known about the longer-term South American forecast or the crop itself gets further along. On the flip side, the bears have the continuing threat of building global supply that seems to be able to trump most all bullish plays.
Bottom line: Most insiders clearly understand the bearish fundamentals, and the fact that if weather cooperates in South America and then for the U.S. producer in 2016, prices could certainly move to sub-$8 levels, perhaps even to sub-$7 levels. Fortunately, with prices already well below our most recent 5-year range, very few want to place heavy bearish bets with the "weather wild-card" clearly in-play and the uncertainness in the macro space. Everyone knows the explosive upside potential of the soybean market and with some sources now believing the commodity markets are starting to bottom, the short-side might seem like an aggressive wager to some of the larger big-money players.
Remember, some of the larger funds are still sitting on a possible powder-keg of investments in Brazil. One way to hedge against a possible political or financial meltdown would be to get long soybeans rather than short. The obvious fear is inflation skyrockets, farmers hold onto their crops, labor unions strike and shipments can't get expedited out of the country.
As a spec, I don't like playing in waters where massive cross-hedges can tip the boat, so I'm apprehensive being short this market until those threats are eliminated, even though the traditional fundamentals clearly dictate further price depreciation in this space.
As a producer, I want to stay patient and hope that an "unknown" arises and sparks a fear induced rally giving us better opportunities to reduce future risk. Keep your eye on South American weather and politics!