Sponsored By
Farm Progress

Be careful betting on the obvious in the soybean marketBe careful betting on the obvious in the soybean market

Kevin Van Trump

May 27, 2016

1 Min Read

Soybean traders continue to talk about the massive rally in meal. There have been rumors that some large traders and funds have been caught on the wrong side of the market. Interestingly, some traders were talking about how Chinese meal might soon pencil into the U.S. ports. Not that it will happen, but certainly crazy to think about.

There's also a lot more talk about soybean prices in Brazil, when paid in "reais," now being higher than they were back in 2012, when U.S. prices were close to $18 per bushel. In other words, the Brazilian producer is enjoying a big windfall, hence more than likely going to forward price and plant a massive crop going into 2017. The bulls warn that the geopolitical complications swirling inside Brazil have the banks nervous and perhaps less likely to loan.

The bulls also continue to point towards the possibility of a La Niña weather pattern causing complications for South American producers in late 2016 or early 2017. As a producer, I'm sticking with my longer-term game plan and staying patient. There are just too many headlines circulating at the moment to get overly aggressive.

As a spec, there's a ton of eyes on the spreads, particularly in trying to short the old-crop contracts. Personally, I think "bear-spreading" this market at the moment is still extremely risky and that there are easier shots to take. Be careful in this market betting on what is believed to be the obvious!


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. 

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like