So much for the U S crop size, which is big. The trade is now looking at the demand side, which leads us to South American production. Argentina has been dry, which concerns the trade, and ethanol demand has been good. Soybean strength has been supportive along with the funds buying.
With all of the above being said, the bull still needs to be fed. The producer hasn’t been a heavy seller of product. He will have to move more, as he will need funds to pay his costs. In addition, he might not have enough storage space for the harvest. South American weather will probably not stay dry forever. There will be enough water to keep the crop growing.
With a very large supply side, you will need something new from the from the demand side or a South American issue to keep the rally in tact. At these levels, it’s very difficult to be a buyer.
Series 3 Licensed
Senior Market Strategist
Gerry has more than 30 years of experience as a licensed stock and commodities broker. His background includes working with Swift Henke in back-office operations; H. Hentz, where he handled the stock order desk; Drexel Burnham, where he helped set up the commodities operation in Chicago and did business with commercial and retail clients; and Smith Barney, where he served commercial and retail customers. Prior to joining RJO Futures, Gerry worked with retail and commercial hedge customers at MF Global.