Soybeans have been on a wild ride the last few days, riding news of high stocks, news of the U.S./Mexico/Canada trade agreement (USMCA). What’s a farmer to do?
RealAg Radio host, Shaun Haney spoke with Arlan Suderman, chief commodities economist at INTL FCStone Inc., to talk soybeans’ recent woes.
“I think that there’s a lot of fund managers who think that $8 futures is cheap, and farmers would agree with that,” Suderman says. “But they tend to think that you can’t go lower, they’re young enough they don’t remember them trading lower, and so they they think, ‘Well, I really don’t want to have short positions this low, maybe this is the bottom?’ — I’m really nervous about that type of philosophy that might leave somebody exposed.”
Suderman explains in a recent survey conducted by INTL FCStone, they predict an average 54 bushel soybean crop, and adds if that’s the case, the U.S. could see soybean ending stocks well over 900 million bushels — which concerns him.
On another concerning matter, Haney refers to U.S. Farm Report’s host, Tyne Morgan’s latest tweet.
The latest @PurdueAg/ @CMEGroup Ag Economy Barometer found 46% of producers say they plan to store most of their soybeans until the current trade conflicts are resolved. @USFarmReport @AgWebEditor pic.twitter.com/80fElF6Rau
— Tyne Morgan (@Tyne_Ag) October 2, 2018
In response, Suderman points out a different survey his company conducted which says of those interviewed, they believed a trade deal will come after the midterm elections in the first week of November, or shortly after the first of 2019.
“On that expectation then that we would get a surge of demand and short covering by the speck hedge funds and get a nice, quick rally in the market, they’re going to hang on to their soybeans believing that there will be higher prices to come down the road,” Suderman says, adding that he believes at about a 75 per cent odds, that there will be trade deal in the November to December time frame.
However, he is quick to remind farmers and traders to always have a plan in place to protect their risk.
Listen to the full interview between RealAgriculture’s Shaun Haney, and INTL FCStone, chief commodities economist, Arlan Suderman below. Story continues…..
In regards to wheat, Suderman refers to one of his latest tweets:
Russia watchdog may temporarily suspend 30 grain loading points if violation of phytosanitary rules is confirmed – Reuters. Wheat up 12, KC up 13, MN up 7, corn up 2, beans up 6 #oatt
— Arlan Suderman (@ArlanFF101) October 2, 2018
He says it could be just propaganda from the Russian government; however, it could also be the country’s way of slowing down exports while avoiding an embargo.
In the corn market, and keeping with the theme of tweets-as-quotes, here’s one more Haney notes could be a bullish indicator in a crop like corn:
Postitive money flow returned to the commodity sector this week. Trade war fears eases and traders fret about possible tight energy supplies as U.S. sanctions on Iranian crude oil take effect. #OATT
— INTL FCStone (@INTLFCStone) October 2, 2018
Suderman says Haney’s thoughts are a supportive factor to the corn market.
“The combination of the (USMCA) coming at the first of the fiscal quarter when a lot of new money becomes available, (and) creating an upbeat atmosphere — maybe things are back in line and maybe this becomes now the pattern or the model to use in getting an agreement with Europe and with Japan, and ultimately with China,” Suderman says.
He adds all of that gives people a sense of optimism, even if other signals are still bearish.
Haney says, “It’s really a tough time right now to market beans, I think this is a super challenging environment right now for farmers trying to manage all this risk and get the best price they can.”