The January reports were bullish in general. The USDA lowered their yield estimates for US corn and soybeans, pulling both down below the low end of the trade range. The corn yield was cut 3.8 bpa to 179.3 bpa, while the soybean yield was cut 1 bpa to 50.7 bpa. The end result was that corn and soybean carryout also came in below the smallest trade estimates. The US corn carryout dropped to 1.540 billion bushels (-198 million), while soybeans dropped to 380 million bushels (-90 million).
Markets surged higher on the bullish reports. The Sell Signal in soybeans resumed on the price surge. We recommend leaning into these Sell Signals and adding to your recent sales. If you sold up to our recommended levels, add another 5% on this rally. If you aren?t sold up to our recommended levels, use this opportunity to catch up.
Although we are happy to receive the smaller numbers, we are cautious because stocks are still expected to be large and South America?s harvest has already begun. We are also about ready to get tough with our biggest buyer ? China. A lot of buying has come into the market, and it will be hard for us to do business at its recent pace for the next 90 days, which happens to be when a lot of farmers need to get some sales made. While we don?t want to rain on the parade, selling into this strength makes good sense to us.
Source: USDA, Reuters