Farm Progress

Two wild cards remain in soybean market

A supply shortage as a result of Argentina yields will hit the market in the near future.

Kevin Van Trump

May 18, 2018

2 Min Read

Soybean prices are higher this morning on China showing a bit of goodwill by halting its anti-dumping investigation into U.S. sorghum imports.

Longer-term trade uncertainties still remain, but the market is happy seeing some step in the right direction. Technically, the market continues to test key support levels. As I had expected, the market continues to struggle with finding ways to build on upside momentum. This transitionary period or vacuum in moving from South American to U.S. production has taken its toll on the bulls.

The obvious 800-pound gorilla in the room has been U.S. trade negotiations. The Argentine production losses have been well advertised, but some of the bullish enthusiasm has been lost by the long drawn out trade negotiating process. As I mentioned weeks ago, it simply gives the bulls too much time to think about their fears which then become uncertainties.

At some point, I have to imagine the supply shortage created by the poor conditions in Argentina will ultimately come home to roost. I also believe the current trade headwinds will eventually turn into tailwinds for the ag sector. The problem is, between now and then, we just don't know how much pressure will be applied and or how long it will last? As both a producer and a spec,

I remain a longer-term bull but believe there could still be more nearby downside risk. This is an insanely tough market right now to trade or forecast short-term price action, there's just a massive number of non-traditional moving parts influencing trade, i.e. Mexican elections, Chinese tech positioning, U.S. mid-term elections, Brazilian political scandals, Argentine inflation and tumbling peso, etc... From my perspective, "weather" and "Washington" still appear to be the biggest "wild-cards" and the most powerful headlines in the market.

 

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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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