Soybeans Above 10.50

**charliep** · Apr 16, 2009, 10:02

Informa Economics reduced the size of their Argentine soybean forecast today and highlighted harvest is much ahead of normal. Old crop supplies are tighter than expected

I note your comment about short term. An area that will have to continue to be watched is US soybean/corn acreage. Also note the drop in total seeded acres in the last USDA seeding intentions report. Will some of these acres come back? Tighter old crop and weather over summer does have potential to make things interesting.

**pilpilsner** · Apr 16, 2009, 10:24

10.50 is huge,a few more ticksand closes and we get momentum traders.

Which are computerized black boxes.

**charliep** · Apr 16, 2009, 10:33

I have to note we are looking at the front end month with an inverse into new crop.

Had to look at the soybean corn price ratio and impact on acres. currently about 2.3 ($9.50 ish Nov. soybeans and $4.15 Dec. corn). Googled and found one analyst who uses 2.1 as a place that will shift corn to beans. Article has some interesting graphs.

http://agecoext.tamu.edu/fileadmin/user_upload/Documents/outlook/feedgrains/2009/FG_04-09-2009.pdf

**boarderbloke** · Apr 16, 2009, 11:57

weather will also be pushing corn to beans this spring, on U.S. Ag chat sites, there is plenty of talk about being behind, avg planting dates and wet soil. that just pushes acres to beans

**boarderbloke** · Apr 16, 2009, 12:07

too bad most of the rally in global veg oils, is being absorbed into "wider basis" and higher crush margins. Unlike U.S. growers of veggie oil, Canadians growing oil crops are loosing out, Canadian canola crush margins will be close to $150/t, yes thats $3.40 per bushel net profit after you've risked to grow it! (with all the input costs you put in the ground in May)

**classicalliberal** · Apr 16, 2009, 12:34

With regard to the basis getting wider, that will always happen when prices rally and you have a large supply of something, like oats for example. The delivery process is supposed to make it so that the cash and futures prices will converge which doesn't always work well but in the long run it will happen. When basis is cheap, it is up to arbitrageurs to buy the basis cheap and store it, if there are carries in the market and to sell it out when the spreads either flatten or inverse or the basis strenthens. Something that people have to keep in mind is that the cash price is the true value of grain, oil, commodities and the futures are just a tool that people use to hedge price risk as well as speculation.

**charliep** · Apr 16, 2009, 12:44

I assume based on the COPA board crush margin.

https://www.theice.com/marketdata/reportcenter/reports.htm?reportId=2

**charliep** · Apr 16, 2009, 13:42

Will note today's excitement (old crop mostly) came from the meal side. Soyoil actually down a bit. Also mainly off the May contract.

**boarderbloke** · Apr 16, 2009, 14:43

yea, i'm surprised that canola moved up at all! couldn't open your crush margines. Here's yesterdays,

http://news.tradingcharts.com/futures/2/5/123344952.html

Soybeans Above 10.50