Soybean bulls continue to talk about fundamental weather uncertainties in many parts of Brazil and now a few areas inside Argentina. The much larger macro bears continue to point toward weaker currency in comparison to the U.S. dollar. In fact, the Brazilian real is now trading down to fresh all-time lows.
With a current globally supplied market, talk of near record production soon to be harvested in South America, and some 84 million plus acres of soybeans projected to be planted here in the U.S., it's tough to get excited, even at these heavily deflated prices.
From a technical perspective, since mid-October, we've stayed roughly in a range of between $8.50 and $9.10 per bushel. The bulls are hoping the nearby positive swing in the Chinese crush margins along with what appears to be a slight pickup in demand for domestic meal will be enough to break our downward cycle. I wish I could agree, unfortunately I think that optimism is still a ways off on the horizon.
Nearby in what the trade deems an adequately supplied marketplace, I see it being all about the outside macro space and the weather headlines. I just don't see the traditional supply and demand headlines like Chinese crush margins or a slight uptick in U.S meal and or bean oil usage being enough to spook the bearish oriented herd. If global suppliers were tighter and the U.S. dollar not as strong, in comparison to the South American currencies, I might have a much different opinion.
As both a spec and a producer in this environment you have to be careful not to read too much into the numbers. This is all about getting the "big picture" right. Moral of the story: No matter what the market, make certain you always know what headlines are moving the trade and what new music the big-money is listening to. The rest is simply noise.