Soybean bulls are talking about possible weather uncertainties coming down the pipe associated with Tropical Storm Harvey. Talk is that the soybean harvest down in the Delta could run into a few problems if the weather turns problematic like many are now forecasting.
Heavy rains could easily delay the harvest in some important production areas and leave some pockets bidding up for supply. Bulls also continue to talk about the biodiesel tariffs most recently being slapped on bean-oil type imports, which now makes demand for U.S. domestic bean-oil more important. Obviously, if demand for U.S. domestic bean-oil is pushed higher, because imports are slowed by the increased tariffs, crush numbers will need to be increased.
By how much, who really knows? Soybean prices have been pushing up against heavier resistance in the $9.50 to $9.75 area, as traders add a bit more risk-premium on reports of lower pod counts and weather related problems down South that could create harvest complications. This is certainly something we want to continue monitoring as it plays itself out in the weeks ahead. Lots of people are throwing their estimates in the ring in regard to how much it will increase U.S. domestic bean-oil demand, but I believe it's still to early to know based on all of the moving parts associated. I suspect if you wanted to make a broad sweeping early guess you could argue the tariffs may create an increase of somewhere between +1,000 and +1,500 million pounds.
The bears in the soybean market, continue to point to record U.S. acres getting even larger and an average yield that will keep supply more than adequate at +400 million bushels. Also, the bears are talking about Hurricane Harvey creating perhaps more widespread improvement for drier locations as the storm moves inland next week bringing along more moisture, and perhaps a needed drink to producers to the North and to the East.
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