Soybean markets have been encumbered by the current trade war with China for a few months. Could a rally bring $9.50 soybeans in the next month? One analyst thinks so.
“I think we have the potential maybe to get back to $9.50 [soybeans],” Kim O’Halsapple of Total Grain Marketing says. “So you know, not a big rally, but I do see a rally coming in in the short term.”
According to O’Halsapple, the 2018 soybean crop looks like it’s going to be fairly large and the crop conditions rating have been good, which could lead to a rally in the next 30-45 days.
“Farmers have been really aggressive selling new crop [soybeans] this year,” O’Halsapple says. “It wouldn’t take much of a rally now that we can see the yield potentially being very good, $9.50 will buy a lot of beans."
Naomi Blohm of Stewart Peterson warns producers to take advantage of profitable price opportunities when they come.
“I don't think you can be complacent anymore, like in years past,” she says. “So if you're at a price point where you can make it work, I would make the cash sale and get it on the books.”
However, Blohm says farmers need to understand that depending on how trade issues play out and how big yields end up being, the price of soybeans could either drop $1 or rally $1. Producers should be ready for both scenarios, she says.
“You're not going to be able to outguess which one it's going to be, so just be ready for both,” she advises. “If you're not willing to make cash sales, consider some short term puts under the market just to give you some price protection. If you need go ahead and make the cash sale, think about re-owning with call options. I would go out into 2019 to give yourself coverage.”