Soybean Strategy - August 28, 2019
2018 crop: Recent soy price weakness is viewed corrective in nature and thought likely to precede a return toward better marketing opportunities. Target $9 basis November futures for your next sales.
2019 crop: Patience on new-crop soybean marketings is warranted until futures return to the mid-$9 range. Establish incremental offers near $9.50. The use of basis tools may be a consideration at this time.
Fundamentals: Soybean futures are being driven by two primary factors: U.S. production and Chinese demand. There are concerns over the U.S. crop as pod counts from crop tours are considerably lower than average. This makes a long end to the growing season critical to produce an adequately sized crop. At the same time, we continue to see China pass over the U.S. in favor of Brazil for imports. This is a direct result of the ongoing trade war. The more soybeans China books from Brazil and the further China reduces its demand base, the less the need for a large U.S. crop.
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