Soybeans Soaring November 2020
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Started by metmike - Nov. 5, 2020, 12:08 p.m.

Nov. 5: CBOT #soybeans break through $11/bushel for the first time since July 14, 2016. 

Thursday's high at the time of this post is $11.12-3/4 for the most-active. 

That is $2.94 higher than the 2020 low of $8.18-1/2 set on April 21.


By wglassfo - Nov. 5, 2020, 8:59 p.m.
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So the question is:

Why are beans going up

In our local we have strong corn prices with chicago over 4.00 in multiple months

I will give you my take which is nothing but a wild guess

Concern about SA crop conditions [dry]

China needs beans and/or food

2019 USA crop was over estimated

Another stimulus pkg. The only unknown about a stimulus pkg is how big. Dollar seems to want to weaken although nothing as of yet says it will weaken

Biden will be willing to trade with china

It seems that grain prices will remain flat for yrs and then suddenly seem to play catch up with inflation

Take yer pick, maybe none of the above, but I think we will see stronger grain prices, on average in the yrs ahead

Now that doesn't mean I am wildly bullish as we have sold considerable crop at good prices. Protection in case this rally disappears. When the plate goes around, nothing wrong with taking a cookie, especially if the cookie is profitable

By metmike - Nov. 5, 2020, 9:19 p.m.
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Thanks Wayne!

Record demand from China has been the biggest factor, I think. 

By buck1400 - Nov. 7, 2020, 8:11 a.m.
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Thanks Wayne and Mike.

The strength in Soybeans caught me by surprise.  I think it might be a market to keep an eye on.  Maybe early in a bigger move.

I think Wayne hit on the fundamentals.  

I have been looking around for some tech views of the market.   I am not a chart guy but have read Murphy's book a couple times. :)  Most of the tech stuff I read I dont really understand.

When I look at monthly continuation, I see some resistance around $12 from the June '16 high.  I guess I also think I see a H&S top Sept '12 with a neckline that would put resistance about $12.60.  After that who knows.

ETA:  Current local soybean basis is about $0.21 better than 3 year average basis even after strong move up in futures.

By metmike - Nov. 7, 2020, 11:35 a.m.
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I think that when you get parabolic moves up to ration supplies, they often feature panic buying near the end/top which doesn't care about charts or previous highs. There are enough buy at the market type orders near the top from traders crying uncle to overcome any resistance.

Those speculators brave enough to be selling at extreme highs and a parabolic move up are picking a top. If they are too early, they can sometimes turn into the same ones crying uncle shortly after that when their drawdown exceeds expectations by a wide margin.

I don't know if that's what might be happening here. If the weather in South America turns adverse, then its likely. Brazil is buying our beans right now. They are sold out and the new crop is months out and they planted late in number 1 producing Matto Grosso because of drought.

We have a La Nina that enhances chances of drought but thats not my prediction, just something to watch and the market has dialed in risk premium for that.

If the weather ends of near perfect for SA the next few months, then it may keep a lid on all of that.

However, drought over a significant area will cause prices to go much higher and could blow thru previous highs.

By metmike - Nov. 7, 2020, 11:39 a.m.
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Big rains coming up in much of Brazil the next 2 weeks!

The area's to watch now, that will turn drier are N. Argentina and very far south Brazil. 

By metmike - Nov. 7, 2020, 11:44 a.m.
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 Re: Re: Re: INO Morning Market Commentary            


                By metmike - Nov. 6, 2020, 3:34 p.m.            


Congrats to our US producers!

 I suggest that those who consider forward contract sales on their crops, do consider some sales on the way up here over the next 2 months. There is no way you can't make a nice profit at these prices. Do not try to pick a top and do assume, that when we are within shouting distance of the Brazil harvest, let's say in January, that prices could plunge from a spike high before then(from rationing the shortage of old crop).

With the current La Nina lasting into 2021, odds of a drought in the US next year are elevated. With the current, extremely bullish fundamentals, a drought in the US would cause all time record highs in the beans by a wide margin and corn would spike much higher too.............but this is wild speculation.

Leave the speculation to the speculators who make and lose money based on taking on risk. Farmers are interested in taking OFF risk.

The biggest risk in selling beans early is having a drought on your farm in 2021. This can be protected by replacing the sales with calls, if you are comfortable with that strategy.

Then there is crop insurance in case you have a failure. I am not an expert on the rules regarding this protection.

I am just suggesting that you consider locking in some wonderful prices for a small portion of your 2021 crop if/when we get some crazy spikes higher here,  especially beans as the market bids up the price to ration the remaining(short) old crop.

Use the market to maximize your 2021 profits. 

By metmike - Nov. 17, 2020, 12:29 a.m.
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NOPA U.S. #soybean crush in October hit an all-time monthly record of 185.245 mln bu, well above the average analyst guess of 177.123 mbu (which would still have been an Oct record). 

Soyoil stocks rose to 1.487 bln lbs, above year-ago but below 2y ago. Trade guess was 1.448 bln.




By metmike - Nov. 18, 2020, 12:08 p.m.
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#Brazil soy exports  78% of the #soybeans Brazil has shipped within the last 5 years landed in #China. When was the last time (calendar year) that China was NOT the top importer of Brazilian beans? And which country was #1 at that time?


By metmike - Nov. 19, 2020, 3:20 p.m.
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Nov. 18: CBOT #corn and soybean futures both hit fresh rally highs. Corn touched $4.33/bu on Wednesday, its highest for the most-active contract since July 24, 2019. 

#Soybeans hit $11.89-3/4, the highest since June 13, 2016.



By metmike - Nov. 19, 2020, 3:22 p.m.
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The deferred months are not as strong, creating an unusually strong inverse. These are showing the most active contracts for #corn and #soybeans versus the new-crop 2021 contracts (Nov beans, Dec corn). Sorry about the difference in colors, I can't control that unfortunately.



By metmike - Nov. 19, 2020, 3:24 p.m.
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Look what happens to those spreads when I add two more years. For #corn, late 2012- early 2013 totally dwarfs this year's anomaly. But #soybeans are comparable for the same dates in 2012 and 2013.



By metmike - Nov. 23, 2020, 11:53 a.m.
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"Beans in the pre-teens" Nov. 22/23: Most-active CBOT #soybeans hit $12/bushel in overnight trade, the first time since June 10, 2016. If futures move past $12.08-1/2, would be the highest since June 30, 2014. Beans haven't truly been in the "teens" since a week before that.


By metmike - Nov. 24, 2020, 8:08 p.m.
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Very impressive comeback today suggests the top is NOT in.

By bowyer - Nov. 24, 2020, 8:38 p.m.
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Great to see good prices again! I fear too many farmers sold too much too soon. I started selling when I could get $10 cash out of the field. Still have half of my beans in the bin, and am long on paper although I've been in and out many times. I wasn't real happy when I got up this morning and saw bean futures. I've got stops in tonight so I'll sleep just fine.

No positions in corn except long in the bin

I've been buying a few feeder cattle and hog calls for next spring (hogs next fall)

By metmike - Nov. 24, 2020, 10:43 p.m.
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It's hard to go wrong in  a market like this bowyer!

You've been in the business for decades and probably have a great marketing strategy. I can tell that you understand the markets extremely well.

Producers use the markets to reduce risk by locking in opportunities to sell at wonderful prices. 

Not sure how wonderful you want that price to be but prices always hit a top when everybody is the most bullish and thinks that we are going higher.

I actually have some confidence that prices have not topped and think theres a chance we could spike a few bucks higher than this if prices need to ration demand that is greater than the dwindling supply right now.

New supplies won't come to the rescue from Brazil for a couple of months(early harvest).

So the table is set for a parabolic move higher.........but what if China has bought all they need for the next few months and stops buying at this crazy high rate until after the Brazil harvest?

Not saying that will happen but if the market got news like that, the bullishness may have peaked already.

Since SA now produces more beans than the US, we can sort of pretend this is late May in the Northern Hemisphere a couple of decades ago and the market is completely running out of old crop beans until the US new crop is harvested.

It's possible, if the weather turns very wet in the drought areas of Brazil that this could stop prices from going much higher. 

At the same time, a worsening of the drought in Brazil, in December 2020, just like if we had a worsening drought in June 2000, with extremely low stocks, could send beans to new highs by a wide margin. 

How much adversity is already dialed in at $12?

So far, this high price doesn't appear to be causing  major cutbacks in demand that we know must happen in the next 2 months because bean stocks can't go to 0.

Just some things to think about.

By bowyer - Nov. 25, 2020, 9:25 a.m.
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Thanks mike ! I wish I had a good marketing strategy , but it seems I am wrong as often as I'm right. I decided last night to reduce my soybean futures position by half. Like you, I feel that beans can still explode higher, but maybe they won't ! I sit back and wonder why do I want to buy $12 beans? I remember selling cash corn for $8.30 and not feeling good about the sale ! Of course there were a lot of predictions then, that corn was going to $12. I'd be thrilled to get $5 corn now ! If prices do explode higher, I'll be doing some multi year hedging. Thanks for the forum , Mike          I'll be holding my beans in the bin until maybe summer or before new crop is available. Basis could get very good if beans are hard to come by, I may do a HTA and set basis then.

By metmike - Dec. 3, 2020, 11:57 a.m.
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Here's a quick look at that. Most-active soybean futures with weekly net sales of U.S. #soybeans on top. Makes an X.