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Bullish help from USDA could move soybean prices upward


Soybean bears continue to talk about about a rapidly advancing U.S. harvest, the possibility of another record setting yield here in the U.S., and suspect growth in overall demand. On the flip side, the bulls are talking about crop concerns in India and a larger-than-expected cut in total U.S. soybean acres, perhaps a reduction of 1.5 to 2.0 million plus? 

Unfortunately, outside of India and a possible surprise cut in acres, it's tough to fundamentally find a lot to cheer about right now. Increasing global supply and South America planting another round of record soybean acres are the two big bearish items that have become extremely difficult for the bulls to offset. Yes, I could see outside macro market headlines or simple knee-jerk reactions to weather uncertainties in South America giving us some brief upside potential during the next 90-days, but it's becoming increasingly more difficult to build a case for a sustained rally to the upside.

With this in mind, you have to believe significant rallies are simply good opportunities to reduce a bit more risk. The obvious first round of technical and psychological resistance seems to be right around the corner at the $9.00 level. After that there seems to be heavy resistance building in the $9.30 to $9.50 range. Bottom-line, with the U.S. harvest advancing so quickly with great yields, and producers in South America rolling out more beans acres, its tough to get overly excited about the upside.

Keep in mind, Minnesota already has about 70% of their crop out of the field. Another major producer, Illinois already has about 50% of their crop out of the field. Iowa, Indiana and Nebraska, who round out our nations top-5 soybean production states, will soon be there as well.  In other words we're taking a lot of U.S. "production risk" out of the fields and into much safer locations. If you're hoping for a move to the upside, from my perspective it's going to take some bullish help from the USDA on Friday or increasingly heavy rains in South America. Unfortunately neither are a guarantee!


Ranking The Soybean Harvest Pace

  1. Louisiana 81% harvested vs. 80% last year vs. 78% average. 
  2. North Dakota 70% harvested vs. 28% last year vs. 45% average.
  3. Mississippi 69% harvested vs. 64% last year vs. 64% average.   
  4. Minnesota 69% harvested vs. 21% last year vs. 44% average.
  5. Illinois 49% harvested vs. 16% last year vs. 31% average.
  6. Arkansas 46% harvested vs. 41% last year vs. 38% average.
  7. South Dakota 46% harvested vs. 22% last year vs. 42% average.
  8. Ohio 45% harvested vs. 19% last year vs. 23% average.
  9. Indiana 41% harvested vs. 17% last year vs. 29% average.
  10. Michigan 35% harvested vs. 7% last year vs. 22% average.
  11. Iowa 32% harvested vs. 8% last year vs. 35% average.
  12. Nebraska 31% harvested vs. 15% last year vs. 35% average.
  13. Kentucky 28% harvested vs. 15% last year vs. 22% average.
  14. Tennessee 23% harvested vs. 16% last year vs. 23% average.
  15. Wisconsin 21% harvested vs. 6% last year vs. 24% average.
  16. Missouri 17% harvested vs. 8% last year vs. 14% average.
  17. Kansas 15% harvested vs. 7% last year vs. 18% average.
  18. North Carolina 6% harvested vs. 6% last year vs. 4% average.

TAGS: Soybeans
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