June 8, 2018
Soybean bulls continue to take it on the chin as prices are down another -50 cents this week, breaking through most all nearby technical support on the charts. The question now is will the mid-January low at $9.65^2 be able to hold as nearby support? Beyond this level, I suspect the trade will look to test more major psychological support at or around $9.50.
Some insiders are thinking perhaps the trade could get even more aggressive and try to challenge the 52-week low set back at $9.35 per bushel on June 23rd of last year. Personally, I think that sounds a bit extreme, but I've been trying to figure out what's going to stop the bleeding, especially if we continue to see no real progress in regards to trade with China, and the weather continues to cooperate are in the U.S. We could also catch some headwinds if the USDA eventually confirms more U.S. soybean acres have been planted and or the fact they might need to reduce their current export estimate as Chinese buyers remain hesitant?
Yes, longer-term, I still believe reduced production out of Argentine ultimately comes home to roost, creating a more bullish environment. But as I've mentioned several times, there's still a ton of cards to be turned over between now and then, some of which the bulls in the market aren't finding very palatable.
As a producer, I remain extremely patient. My time-frame target for reducing more longer-term price risk remains August-to-October. As a spec, I'm becoming more interested in building a bullish strategy on the pullback, but believe there is still more nearby downside risk. I still see no need to get in a major hurry. It's very easy for equity to get chewed up in this environment, that's why I've stayed extremely patient.
Weather and Washington remain very tricky to forecast... For what it's worth, the Goldman roll started yesterday as they moved out of the JUL18 contracts and into the deferred contracts. Most inside the trade are looking for a slight reduction next week by the USDA in regards to the Argentine production estimate and perhaps an ever so slight increase in U.S. ending stocks. Not a lot of big adjustments expected in Tuesday's report.
About the Author(s)
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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