Farm Progress

Why I am staying patient ahead Of The USDA report

Kevin Van Trump is remaining patient-- very patient as he awaits the U.S. yield estimate.

Kevin Van Trump

November 9, 2017

1 Min Read

Soybean bulls continue to hope and believe the USDA will reduce their current average yield forecast in tomorrows report. In return both the domestic and global balance sheet could become a bit less burdensome, placing more pressure and importance on South American weather.

Hence the bullish argument for a bit more weather-related risk-premium needing to be added, especially with a La Niña pattern brewing. On the flip side, the bears argue that both domestic and global supplies are more than adequate, South American weather is cooperating, and U.S. exporters appear to be losing some additional market share to South America, meaning that overall 17/18 demand for U.S. beans might not be as strong as the USDA is currently forecasting.

From a larger macro perspective, I can argue that continued strength and support in crude oil might eventually start spilling over into other asset classes. With soybeans having really the only fundamental story or potential "bullish story", it seems to be garnering the most attention of the row crop markets. I'm hoping this continues to keep the downside fairly limited. If crude oil prices start to fall under more heavy pressure, all bets are off on if the larger macro players will still have a vested interest in soybeans?

Bottom-line, we have strong global growth, strong buying from China, strength in oil and some uncertainty in regard to South American weather that's keeping the bull intrigued. More short-term, we also have continued talk that the USDA might lower their U.S. yield estimate and slightly reduce ending stocks. As a producer and a spec I continue to stay extremely patient.

Spread trading long soybeans vs. short corn, wheat or another ag market still seem to be the most popular song and dance.

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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