Farm Progress

Soybeans reach new decade low

Is the soybean crop going to be larger than first estimated?

Kevin Van Trump

September 19, 2018

3 Min Read

Soybean prices are coming off another contract low. In fact, soybean prices have now posted a fresh new decade low. The lower-highs and lower-low dance steps clearly remain in vogue. Talks of an already record U.S. crop getting larger, record acreage being planted in Brazil, and thoughts of the U.S. - Chinese trade conflicts perhaps dragging on for an extended period, is allowing the bears to swing for the fences.

As I've mentioned for weeks, talks of sub-$8 soybeans could soon be a reality. As a producer, I'm absolutely kicking myself for not pulling the trigger on any 2019 bushels. We traded to $10.10 in the NOV19 contract and I was holding out for $10.20 on that first sale. We are now trading at $8.80 and I have nothing sold. I also feel jammed up on my remaining unpriced 2018 bushels that will soon be harvested. I was lucky to be extremely aggressive in selling 60-65% of my estimated production early.

Now with the extra bushels that's only like having 50% priced, so we have some major post-harvest marketing work to get accomplished. With the basis so bad, it feels like we have almost no choice but to play the waiting game. This scares me, because everyone else seems to have this same plan. As I've learned many times, this is not a team sport, so I doubt doing the same as everyone else will end up paying big dividends. I just hate to dig the hole any deeper by trying to pick a bottom. If it's any consolation, I've seen some very well respected traders take some heavy shots directly on the chin trying to buy this break. I've been fortunate to avoid that trap, but still left holding the bag in regard to unloading new crop risk.

At this point, I'm not even sold on the fact we make a dramatic bounce higher on more positive trade news. Can the market get it's head back above $9.00 by the NOV18 expiration? I'm really starting wonder? The NOV18 options expire in 37 days on October 26th. The First Notice Day in NOV18 futures is October 31st and the contracts Last Trading Day is November 14th. Keep in mind, we still have to digest an upcoming October 11th USDA report, where most sources are currently thinking the yield works itself higher and the balance sheet expands.

Something else to keep in mind, the Spring Planting insurance guarantee was established at $10.16 per bushels. Unfortunately, since it's revenue based, those with extra bushels and record yields probably won't collect. Those with 85% coverage are looking at $8.64; 80% looking at $8.13; and 75% coverage at $7.62. One bright spot, Informa is forecasting a large reduction in U.S. soybean acres for 2019. From what I heard, their early estimate is for 82.27 million U.S. soybean acres in 2019, which would be down significantly from this years nearly 90 million acres planted.  

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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