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Soybean market marches on

04/18/2013 @ 3:48pm

The soybean market continues to have a swirl of positive news surrounding it.  Strong cash basis levels are present for beans and meal. Export sales for beans and meal are very strong.  They are so strong that exporters have basically sold 100 percent of the marketing year projections for both commodities.  (Don’t worry, the U.S. usually “oversells” and then buyers roll some sales to the new marketing year.)  Processors have very strong bids for beans, too, as a result of these meal exports and domestic demand.  

Meanwhile, it is becoming more and more obvious that the Argentine farmer is a very tight holder of inventory.  This has slowed bean exports/crush/meal exports.  Volumes out of Brazil are still not as hoped.  It all begs the question, “if you needed beans or meal promptly, where could you get them?”  

It is a fight between what is written on paper and reality.  The USDA, as well as other analysts and traders, have written down crop sizes and what can be exported or crushed.  The USDA does not tell the market how this will happen and it does not dictate how much can be exported or crush in each month.  Price has a function to perform in order to balance supply and demand.  

Ever since the speculative liquidation that happened after the Stocks report (a dollar down in six business days), more and more market participants have come to understand that price has not choked off demand.  End users will need to be convinced to use as little as possible until new crop harvest.  The questions are still out there, waiting to be answered.    

The risk of loss in trading commodities can be substantial.  You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.    

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