soy-harvest

USDA report looms over market

Argentina's lack of production this year is not helping U.S.A. farmers as much as they had helped.

Soybean bulls are talking about a bit more fear circulating inside China in regard to lack of available supply in the months ahead. There seems to be more talk in the headlines of Chinese imports lagging and Brazil not having near enough supply come late-Sept-Oct-Nov. There's also talk of Argentine crushers needing to source more supply to help offset their domestic lack of production and heavier than expected Chinese buying.

The uncertainty of the USDA report is also looming. Not only how the USDA will move in regard to yield, but also how they are playing demand for U.S. crush, exports and current Chinese trade relations.

My personal guess is that the USDA bumps old-crop export and crush demand higher which will help shrink the old-crop ending stocks. Unfortunately, new-crop production probably jumps higher by +100 to +120 million bushels on an increase in yield.

Perhaps, the USDA slightly increases U.S. new-crop demand, but it still leaves the balance sheet adding about +50 million bushels, and ending stocks north of +600 million. In fact, some bears are thinking the USDA could eventually push U.S. ending stock estates north of +700 million. The trade is also wanting to see what CONAB does with their updated Brazilian new-crop production estimate, most inside the trade are thinking they bump it higher on increased acreage.

There's nothing really new or fresh in the headlines. We've always thought the lack of Argentine production this year would eventually come back home to the U.S. to roost. Unfortunately, while that has been playing itself out, the market took some hard knockout shots to the chin as Washington has tried to renegotiate trade with the worlds top buyer of soybeans.

As a spec, I will be looking to be a small longer-term buyer if we catch a significant bearish break in price off the report. I will not chase this market higher or buy a breakout. For what it's worth, the tech guru's are still talking about nearby resistance in the NOV18 contract up between $9.20 and $9.25.

Beyond that, there's some argument we could see smooth sailing until the next hurdle at $9.50 is approached. 

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