Soybean prices struggle to hold Friday's recent rally. The market has now tumbled almost -$2.00 per bushel in just the past five-weeks. Bulls are still saying the bottom is now in place following Friday's impressive rally off fresh new contract lows.

Technical guru's always consider it a strong signal when the market is able to post a bullish outside day higher. I'm not so sure I'm on board with the bottom being in place, especially as the upcoming USDA report on Thursday will start taking into account the complications associated with tariffs and particularly the reduction in Chinese demand. In fact, I've talked to a few bears in the market who actually think U.S. soybean prices could eventually drop to sub-$8.00 if the U.S. weather cooperates, the Chinese call all U.S. trade bets, and South American producers plant more acres in the months ahead.

Interestingly the biggest rally in weeks, which happened last Friday, occurred on yet another wave of bearish news, U.S. tariffs on Chinese goods becoming "official" and the Chinese canceling 432,000 MTs of U.S. soybeans. From what I understand, 366,000 MTs of old-crop and 66,000 MTs of new-crop were canceled.

The good news, despite lack of Chinese demand, we are still seeing strong U.S. export sales on weak U.S. prices, especially when comparison shopping against South American supplies. Bottom-line, U.S. soybeans from the Gulf are well cheaper than most all other sources of high protein and starting to be substituted. Bulls are also pointing towards some potential problems ahead in regards to U.S. weather, particularly continued heat and mounting dryness in the extended forecasts for some important locations.

Bottom-line, both the bulls and the bears have some legitimate arguments at this point. I'm not sure there's enough meat left on the bone to the downside to bring in new large bearish bets. But at the same time, I've learned it's extremely difficult to maintain upside momentum on just short-covering and bottom-picking.

It just doesn't feel like there's a big enough story right now to attract large bullish positions. Hence the reason I suspect nearby we continue to trade in a range sideways to somewhat lower. As long as U.S. weather stays cooperative and the Chinese continue to call all bets, it's tough to envision an extended rally.

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