Soybean bulls, similar to corn, are feeling the pain associated with what appears to be improving U.S. growing conditions and uncertainties surrounding China. As I mentioned last week, the banks in China appear to be much more nervous about lines and letters of credit, especially in the wake of their extreme stock market volatility. You have to imagine if credit lines and limits are aggressively reeled in, Chinese importers may have a much more difficult time purchasing and securing foreign inventory of beans, DDGs, barley, etc.
New-crop soybean prices here at home are in a free-fall and are now facing heavy fundamental, technical and macro market pressure. Some insiders are thinking the trade has its sight now set on the most recent lows set back in mid-June at around $8.95. Despite the bearish weather forecast here in the U.S., the fear surrounding Chinese demand and the stiffer competition from South America, I still believe there's a lot of uncertainty about the crop and the overall number of acres that will be harvested here at home.
I also think there's some political risk surrounding South American supply that isn't being entirely factored into the equation. With this being the case, as a producer I do not like the thought of reducing additional price-risk on the break. Keep in mind we already have 60% of our estimated 2015 production risk removed at good profit levels and for many producers that could be more like 100%, considering total production could be in jeopardy.
Even though it could be an emotionally long and painful ride to the bottom, I believe best practice is to remain patient, and wait for more certainty regarding overall production before pricing any additional bushels.
USDA leaves soybean conditions "UNCH"
In its weekly crop condition estimate the USDA left their soybean rating to 62% "Good-to-Excellent" compared to 71% last year. IL, MI improved by +2%; IN, MN, MO, SD +1%; MS, NE, OH, TN, WI "unchanged"; AR, IA, KS, KY, ND -1%; NC -5%; LA -11%.