The nearby contract dropped to the lowest level for a spot month since 30 October 1992. However, mild commercial buying provided light support to trim earlier declines down the stretch. The bearish factors that have been pressuring soybean prices remain in place. World soybean supplies are record large and, with continued good weather in South America, supplies may prove to be significantly larger than currently forecast. The currency situation in Brazil continues to provide incentive for farmer selling while outstanding Loan Deficiency Payments in the United States continue to pressure prices.
Oil remains the weaker product.
While funds maintain very large short positions, there has been nothing to cause them to cover. There is no market perception that stocks may decline. A basis rally may be necessary to change perceptions. Following SCI's crop observation trip to Argentina recently, SCI is forecasting Argentina's soybean production at 18.225 million tonnes. Improved seed varieties and farming practices played a part in this high yield, but mostly cool temperatures, adequate moisture, and a very late first freeze date provided for that record.