Soybean traders now have to consider the fact we not only have the largest number of acres ever planted in the U.S. (soon to be reported at 85 million plus), but at the same time we have the best condition rating for the crop we've seen in the past 20 years.
Yes, we are still seeing good Chinese demand for soy, both old and new. In fact, year-to-date soy imports into China are up by almost 25%. Unfortunately, the market isn't really focused on demand. Instead its all about supply right now. With 85 million acres in the ground here at home, demand bulls simply seem to be rearranging the chairs on the Titanic. In other words, no one really seems to care about the export sales data; the ship still seems to be going down regardless of current demand! Nearby support still looks to be $10.65 vs. the NOV14 contract, but I'm worried if the bears knock on the door a few more times (and the page is officially turned on the old-crop story) we could quickly see prices tumble towards the $10.06 area.
I suspect with Chinese demand staying strong, some definite uncertainties remaining in Argentina and the entire month of August still ahead of our U.S. crop, the trade may take a bit slower approach to reducing price-risk. Producers should continue to keep hedges in place. Any rally back towards the $11.00 to $11.30 range must be viewed as an opportunity to reduce longer-term risk.