While Traders might have priced in a very high yield into the early September lows, the question for today is how high will the USDA pull up the US yield? In fact, the latest yield talk is .3 bushels higher than the USDA August estimate and November beans into the report this morning are sitting 37 cents a bushel above the September lows. With traders expecting old crop exports to be adjusted higher by 40-60 million bushels, using a 49.2 yield the new crop carryout does not grow. The threat is that the USDA jumps their yield estimate over the 50 bushels/acre threshold. History tells us that such a jump for the September report is unlikely and the tendency is to give a more stair step approach to increases. However, traders also saw near ideal August weather and record high crop conditions as reasons to suspect a bearish surprise today. Given the 47 cent rally of the last five days it would seem like the market has only priced in a potential 49-49.5 yield. Unlike corn, the soybean market would not seem to have evidence of issues with the crop, especially with rainfall throughout August extensive and mostly countervailing of periodic bursts of hot weather.
November beans have coiled into a tight range over the last two trading sessions as traders are unwilling to make a big bet before today’s report. Support is seen down at 9684 and the shift the trend higher, we will need to see a close over 9830.
Series 3 Licensed
Frank D. Cholly
Senior Market Strategist
Frank has been involved in many aspects of the futures business, from taking and placing orders to providing high-quality order execution service. As a second-generation participant in markets at the Chicago Board of Trade, Frank spent his early years working in the Treasury bond pit servicing both institutional and retail clients. He then expanded his brokerage duties and began covering a wide range of markets, including stock index, metals, grains and the balance of the interest rate sector. Ultimately, he turned his full-time focus to the grain market, dealing primarily with proprietary and commercial business. Frank was a senior commodities broker at Lind-Waldock prior to joining RJO Futures in 2011.