Soybean bulls continue to hope and believe the USDA will reduce their current average yield forecast in tomorrows report. In return both the domestic and global balance sheet could become a bit less burdensome, placing more pressure and importance on South American weather.
Hence the bullish argument for a bit more weather-related risk-premium needing to be added, especially with a La Niña pattern brewing. On the flip side, the bears argue that both domestic and global supplies are more than adequate, South American weather is cooperating, and U.S. exporters appear to be losing some additional market share to South America, meaning that overall 17/18 demand for U.S. beans might not be as strong as the USDA is currently forecasting.
From a larger macro perspective, I can argue that continued strength and support in crude oil might eventually start spilling over into other asset classes. With soybeans having really the only fundamental story or potential "bullish story", it seems to be garnering the most attention of the row crop markets. I'm hoping this continues to keep the downside fairly limited. If crude oil prices start to fall under more heavy pressure, all bets are off on if the larger macro players will still have a vested interest in soybeans?
Bottom-line, we have strong global growth, strong buying from China, strength in oil and some uncertainty in regard to South American weather that's keeping the bull intrigued. More short-term, we also have continued talk that the USDA might lower their U.S. yield estimate and slightly reduce ending stocks. As a producer and a spec I continue to stay extremely patient.
Spread trading long soybeans vs. short corn, wheat or another ag market still seem to be the most popular song and dance.