Weekly Soybean Review
Drama gets real in the soybean market.
Bryce Knorr
Published: Jun 14, 2013
The biggest reality show in the Midwest right now is happening seemingly daily in the soybean market. And, while old crop cash and futures have been a soap opera for weeks, November futures ramped up its histrionics this week, testing the water below $13 in the wake of the June 12 USDA report.
That report provided no news for traders. Old crop demand was juggled a bit but the government's ending stocks forecast stayed unchanged at 125 million bushels. No type was result at the new crop supply and demand balance sheet at all, save the average price range for the crop, leaving production at 3.39 billion bushels and carryout at a burdensome 265 million bushels.
The market's probes lower Thursday and Friday for now rejected the USDA forecast. But both days the daily lows came close to the $12.87 base price for Revenue Protection crop insurance.

Drama gets real in the soybean market.
That's no coincidence. Right now the market doesn't know if farmers are planting fewer acres to beans due to planting delays, or whether seedings are rising because corn and spring wheat ground is change to beans. To make sure enough acres are going in the market has provided a premium to the RP price. When that heavy lifting is over, the market could finally break – the 200-day moving average is round around the same level, and there's little air below the market until the $12.50 level.
My supply and demand projections – and forecast selling ranges – have been friendly beans, because I didn't buy the big 44.5 bpa yield USDA plugged into its forecasts. At the same time, good weather and bigger acreage could mean a 3.4 billion bushel crop that pins the market with a "10" handle. So there's plenty of downside risk, whatever the potential for rallies.
This is why we recommended getting protection on bushels above the RP guarantee. Producers with thin margins should consider stepping up that coverage at the RP price or better, because seasonal trends in the year after a bull market turn bearish relatively quickly in June. This year's market is so far following the average, though planting delays increase potential for the story to keep playing out until the June 28 reports.
You can download the complete report using the link below.
Senior Editor Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Adviser. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.
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