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Could China be forced to import soybeans sooner than later?Could China be forced to import soybeans sooner than later?

All eyes are on the yield forecasts for now.

Kevin Van Trump

August 8, 2018

2 Min Read
Simazoran/Getty Images

Soybean bulls are happy to see prices again slightly higher, stabilizing and finding support at or above $9.00 vs. the NOV18 contract. Nearby technical resistance is seen in the $9.20 to $9.25 range. A close above that area opens the door to $9.50.

There seems to be more talk circulating that China will have little choice but to import U.S. soybeans sooner rather than later. There's also more talk that heavier Chinese buying of meal from Argentina, will eventually force Argentine crushers to source more soybeans from the U.S. In other words the "demand" story is slowly swinging back towards the bulls. U.S. production is still somewhat of a wild-card, but most inside the market are forecasting a jump in yield by the USDA in their Friday report.

The USDA currently has the yield forecast at 48.5 bushels per acre. Based on weather and overall growing conditions, most believe that number is going to push higher by perhaps +1.0 bushels per acre. There's actually some inside the trade who believe the USDA is ultimately moving the yield north of +50 bushels per acre. In the process, U.S. new-crop ending stocks will probably again push higher from the current 580 million to over 630 million, a jump of +50 million bushels on increased production.

Keep in mind, the USDA is also trying to juggle the uncertainty now surrounding export estimates. Who really knows how that ball bounces in the weeks ahead? I'm staying mostly neutral heading into the report. I suspect if we catch a bearish surprise and the market breaks aggressively, I will look to be a longer-term spec buyer.

As a producer, I will probably take a shot at some small re-ownership. Remember, I already have over 60% of my estimated new-crop production risk removed. A bullish surprise to the upside and I will continue to hold and do nothing. I'm not in a hurry with this market. I still see it as a dangerously volatile market with many extremes directly attached and tied to Washington's ongoing negotiating tactics. Without knowing how this story ends, it makes it difficult to forecast prices nearby. 




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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