Soybean bulls are talking about conditions being too dry in parts of Brazil and too wet in parts of Argentina. Bulls are also talking about deteriorating crop-conditions here in the U.S., especially in some of the larger production areas.
The USDA weekly crop-condition report showed overall conditions falling from 60% to 59% rated good/excellent. More important, however, are the setbacks in the bigger producing states: Conditions in Illinois, Kansas and South Dakota fell by 4% this week; Iowa, Nebraska and Mississippi fell by 3%; Michigan and Wisconsin fell by 1%.
Soybeans dropping leaves were reported at 41% vs. the 5-year historical average of 43%. The USDA reported the U.S. soybean harvest at 4% vs. the 5-year average of 5%. It feels like the U.S. crop is now in a race against the clock. The harvest should start advancing at a more rapid pace, meaning more risk-premium will be allowed to come out of the market as a larger percentage of the crop comes out of the fields.
As both a producer and a spec, I still feel like the market is somewhat range-bound nearby within a $1 trading range between $9.10 and $10.10 per bushel. Bulls argue that the current USDA yield needs to be lowered, while the bears talk about more acres being added to the equation and an already-burdensome supply picture. In other words, it seems you can argue either side. You can chose to talk about the bad yields coming out of fields in parts of Illinois or some of the record harvests being recorded to the south.
As a producer, I would love to see the bulls push this market to the upper end of the trading range so I can reduce a bit more longer-term risk. As a spec, I would prefer seeing a major move to the downside, so I can start looking to build a longer-term bullish position.
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Soybean harvest current vs. historical average
Louisiana 63% vs. 50%
Mississippi 38% vs. 34%
Arkansas 24% vs. 20%
Kentucky 5% vs. 4%
Nebraska 3% vs. 2%
Tennessee 3% vs. 4%
Indiana 2% vs. 3%
Minnesota 2% vs. 6%
North Dakota 2% vs. 8%
Illinois 1% vs. 1%
Iowa 1% vs. 2%
Kansas 1% vs. 1%
Missouri 1% vs. 1%
North Carolina 1% vs. 1%
Ohio 1% vs. 2%
Michigan 0% vs. 0%
South Dakota 0% vs. 5%
Wisconsin 0% vs. 1%
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