Soybean bulls, similar to corn, are having a tough time digesting what appears to be an overly optimistic yield estimate by the USDA. The bulls are also questioning what they believe is a very conservative adjustment to harvested acres.
On the flip side, the bears believe the USDA is correct in their thinking as conditions during August in many areas have drastically improved. The bears are also saying the USDA has tendency to raise not lower U.S. soybean crop production estimates from August forward, so yields could perhaps work themselves even higher.
U.S. export demand is questionable as competition form South America remains stiff and many of the worlds top meal buyers appear to have become more covered. Don't forget, the July NOPA domestic crush numbers are due out Monday, most insiders are looking for another extremely strong reading. Keep in mind the USDA recently raised their crush estimates for both old and new crop, meaning the NOPA numbers may be more heavily scrutinized by the trade.
Technically the charts are in a bit of disarray, but many believe we are setting ourselves up for an eventual retest of the mid-June lows down around $8.95 vs. the NOV15 contract. To the upside a sustained rally above the $9.80 area is looking like a much more daunting task.
I had the guys put together a little graphic in the office that helped me get a better visual of this years estimated harvested acres compared to last year. As you can see, despite the planting delays and extremely wet conditions early on, the USDA is still projecting that a lot of states in the U.S. will harvest more acres (in green) than last years record production. This along with cooperating weather and another round of record supply in South America continues to keep pressure eon the upside.