Soybean traders continue to debate the setbacks in Argentina vs. record production in Brazil, record planted acres in the U.S. and potential trade wars involving the worlds number one buyer of soybeans, China. I continue to hear mixed rumors and talk about the trade negotiations.
Some are saying both the U.S. and Chinese leaders are open to negotiations and comprise. Others are saying the tariffs might just get triggered in May as the two nations are still too far apart. I personally believe things will get hammered out, it's just a matter of how dark it becomes before dawn...
The trade is also a bit nervous about "sold" but unshipped bushels scheduled to go to China. If you recall, the sorghum shipments had to be recently rerouted. The trade would like more details in regards to if the shipments will be canceled or pushed back into the future.
Regardless, they will clearly add to the supply pipeline if they don't ship as planned. I am also keeping a close eye on the recent strength in the U.S. dollar and political headlines surrounding the upcoming Brazilian presidential election.
There are just a lot of moving parts. I still see no reason to get in a hurry to jump on the bullish bandwagon, I still feel like it's going to take more time to play itself out. As a spec, I continue to see new-crop bull spreads as legit plays. As a producer, I like the thought of having about 50% to 65% of new-crop price risk reduced.
I also like the thought of reowning a portion with some limited risk bull call spreads. I still believe there's longer-term upside potential, I'm just not sure the path we take to get there...stay nimble!