Farm Progress

All eyes are turning to the USDA report out next week dealing with the soybean supply.

Kevin Van Trump, Founder

September 7, 2018

2 Min Read

Soybean traders are paying close attention to politics in South America. Argentina has had a series of economic woes and is in the midst of a complete meltdown. Brazil continues to struggle with logistical issues and trucking complications. We also have the first round of the Brazilian presidential election now 30-days away, and the leading candidate, 63-year-old far-right former army captain, Jair Bolsonaro, stabbed during a street rally in the central state of Minas Gerais yesterday afternoon.

From what I understand, he was stabbed in the stomach while he was being carried through the streets of the city of Juiz de Fora by his supporters. Insiders are saying this could bring about some sympathy votes and almost assures Bolsonaro a final spot in the second round later in October.  Even though he's a controversial figure, he seems to be fairly popular with many investors because of his free-market approach to the economy.

The Brazilian currency was stronger following the news, but who knows how it plays out. The point I'm trying to make, is the fact there are many many non-traditional moving parts right now influencing soybean prices. Keep in mind, the market is also trying to digest all of the headline uncertainty involving trade negotiations between the U.S. and China. This makes this market extremely difficult to forecast right now.

The traditional fundamentals continue to paint a burdensome supply side story. There's talk among the bears that the U.S. yield could perhaps push closer to 53 bushels per acre and ending stocks up closer to 900 million. I should note, Informa, bumped their soybean yields estimate to 52.9 yesterday. Meaning even if we factored back in Chinese demand (+250 million bushels) we would still be chewing on burdensome supply numbers. The market would obviously bounce on the initial headlines of China coming back in play, but I'm not so sure after the initial knee-jerk, we would be able to hold the gains.

I'm certainly concerned looking out on the horizon. As a producer, I was blessed to get over 60% of our new-crop priced early and at great levels, but I still need to market the remaining. I also have 0% sold or priced for next year, which is very concerning. As I've mentioned several times, I just don't see a "V" shaped recovery like so many have been forecasting or hoping for.

I feel like we are going to be more "U" snapped or perhaps "W" shaped. Next week's USDA report should tell us more about supply, but I'm thinking we are still a ways off from any type of resolution with the Chinese.  

 

 

The opinions of the author are not necessarily those of Corn+Soybean Digest or Farm Progress.

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About the Author(s)

Kevin Van Trump

Founder, Farmdirection.com

Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20 years of experience trading professionally at the CME, CBOT and KCBOT, Kevin is able to 'connect-the-dots' and simplify the complex moving parts associated with today's markets in a thought provoking yet easy to read format. With thousands of daily readers in over 40 countries, Kevin has become a sought after source for market direction, timing and macro views associated with the agricultural world. Kevin is a top featured guest on many farm radio programs and business news channels here in the United States. He also speaks internationally to hedge fund managers and industry leading agricultural executives about current market conditions and 'black swan' forecasting. Kevin is currently the acting Chairman of Farm Direction, an international organization assembled to bring the finest and most current agricultural thoughts and strategies directly to the world's top producers. The markets have dramatically changed and Kevin is trying to redefine how those in the agricultural world can better manage their risk and better understand the adversity that lies ahead. 

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