In position to see yield over 50 plus plenty of supply

September 12, 2016 10:35AM CDT

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.

Soybeans Daily

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