Soybeans were the topic of discussion this week. Bean movement was mostly based on President Trump's comments about the possibility of China buying another 8 million metric tons of soybeans this year, along industry speculation that we may see the U.S. EPA submit its final guidelines for the biofuel program to the White House Office of Management and Budget for review as early as today. We're seeing some U.S. farmer selling on the rally as well, Speculators are buying, while Brazilian farmers are sellers. Friday was a volatile day with the bean futures complex up strong early in the morning then falling off to lower levels. Corn futures have been following beans to some extent. Farmer selling picked up on this week’s stronger prices. Fund buying continued to push soybean prices higher overnight making new recent highs, but SH26 is approaching both overbought conditions that in turn put hedge pressure on futures.
Many in the trade are saying this rally is way overdone for the news that is out there as it is first “potential” purchases for China and secondly, the U.S. is about $1.00 higher than South America. China’s commercial crushers want to own the cheaper beans so the purchases being made are likely for China’s own reserves.
Yesterday morning export sales came in towards the very low end of expectations for both corn and soybeans. Soybean sales totaled just 16 mbu. Cumulative sales are 82 mbu behind pace to meet the USDA’s annual target. Weekly corn sales totaled 41 mbu, below the seasonal weekly average. Cumulative corn sales are 165 mbu ahead of pace.
Setting realistic price targets and selling early and often may be the plan to consider mitigating risk.
The information below is subject to change. Comparisons of the recent past balance sheets will be helpful when we see what corn acres will come out to be this spring. Next week’s WASDE report will be watched by the trade.
John R. Anderson Vice President of Grain Farmers Union Cooperative 563-380-2311
