Soybean prices are lower this morning as traders continue to debate U.S. and Chinese trade relations. The worlds top two economies just imposed their largest rounds of tariffs which officially go into effect today. Many inside the trade believe relations are going to get worse before they get better. President Trump has threatened tariffs on another $267 billion of Chinese products, while over the weekend the Chinese put the brakes on plans for a new round of negotiations.

Several inside sources are now worried we could be taking steps towards a longer-term deadlock. Bears are also pointing to complications and negative headlines surrounding African Swine Fever. Keep in mind, China recently reported the first couple of cases showing up in the province of Jilin. China has reported close to 20 outbreaks of the disease in eight provinces in less than two months. They are desperately trying to control the disease, but new cases are hoping up every week.

We are also seeing headlines about African Swine Fever showing up in new parts of Europe. This is obviously bringing into question overall global meal demand. Bottom-line, there's still a ton of negative headlines floating around in the soybean market. We rallied +30 cents from the lows posted last Tuesday, but I'm not 100% sold on the fact we can hold and add to the recent momentum. Yes, some areas of the U.S. are fighting too much rainfall, but we are still talking a record-setting crop and a balance sheet that could expand towards a massively burdensome +900 million bushels.

Lets also keep in mind, producer in Brazil are already planting another record-breaking number of soybean acres. As a producer, especially those who feel undersold, using the small rallies to lighten up some additional nearby price risk makes sense. I'm still thinking we will grind sideways to lower until more certainty of a resolution is seen with the Chinese. From a technical perspective, I still believe the nearby range is somewhere between $7.70 and $8.70 per bushel.

Perhaps after the U.S. mid-term elections my opinion will change. I just don't see a big enough headline or reason to shake the bears. A wide-spread weather scare in South America would certainly be a significant bullish wild-card, but I think it's deeper in the deck if it appears at all. Similar to corn, I'm worried the next couple of months could be tough sledding...

The opinions of the author are not necessarily those of Corn+Soybean Digest or Farm Progress.

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