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Soybeans Rally in December


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As we head into the last month of this calendar year, the soybean complex appears to have the most optimism out of the grains. Aside from soyoil, the soy-complex seems to be enjoying the month (for now) of December. January soybeans successfully poked up and over the key 10 dollar mark and more impressively is the soymeal market. January soymeal started this new week with a significant charge higher. Scoring a multi-month high on the charts and underscoring the fact that global demand for protein products remain strong.

However, December is a month that has a tendency to go either way. Four of the last seven years saw soybeans finish the month lower by an average of 292 but the three higher months averaged a rally of over 800 cents! With January18 already up roughly 170 on the second trading day of the month, it appears to be off to a good start.

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Headlines, of course, are focusing on South American weather. Potentially concerning to the market bears is the fact that rain remains to be hard to find recently. With planting progress initially slowed down early in the season, starting off on the dry side has really energized the topic of La Nina and its potential consequences both there and on the states side come spring. However, that is a long ways away yet and in my opinion, still premature after the production surprises we experienced this year.

While the general mood of the market may be trying to improve in the close of 2017, there are still several hurdles for the markets to jump and they may require quit leap. That hurdle is the December WASDE report due on December 12th. With average analyst estimates still a few days away, this report may have some concerning points that the USDA could choose to address this round.

Yield is likely expected to remain unchanged as typical of the USDA for a December WASDE report. With production not on the table, demand will be front and center. The USDA remains hopeful that US soybean demand will pick up through the season with an estimated 2.250 billion bushels expected to be exported; up from 2016/17s 2.174 billion bushels. This hopefulness may be unwarranted as shipments and sales are dragging behind their five-year average pace. Shipments as of todays inspection report stand at 37.3% of the USDA estimate versus 41.8% five-year average. Sales from last Thursday stand at 56.2% versus 71.5% five-year average. While, according to Brazils grain exporting group, ANEC, Brazil could likely export up to 67.0 MMT of soybeans; up from the USDAs estimate of 65.0 MMT; adding to concerns about the future of US soybean exports.

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On a more positive tone in regards to soybeans, and even grains in general, is managed money. Sitting on a substantially large net short position in corn and wheat, managed money has been reluctant to jump head first into soybeans. Estimated at a net long of 33,000 soybeans, 49,000 soymeal and 19,000 soyoil; the products have gained the most buying interest and eventually may trigger a cause to finish buying back their large net shorts of 170,000 corn and 114,000 wheat. Being on the last page of the calendar, many producers are likely shoring up their end of year books; same for managed money which may provide an opportunity for a scattering of sales as the trade eagerly watches the daily forecasts.

Producers and end users may be interested in learning more about our market outlook, strategies currently in place or simply just to chat markets. I encourage you to reach out to me directly at 312-277-0119 or bgrossman@zaner.com. I would love to chat and always available to explore ways we can be a value adding aspect to your operation. Dont forget to sign up for our daily Ag Hedge newsletter with the link above!

-- Brian

Brian Grossman

Market Strategist

Zaner Group, LLC Ag Hedging

(312) 277-0119

bgrossman@zaner.com

@AgHedgeGrossman
www.zaner.com

Forover 30years, Zaner has been helping futures, commodity and forex traders trade smarter, faster and easier. Zaner is an established, highly regarded award-winning execution and brokerage firm known for providing clients with exceptional service. Zaner covers a broad range of commodities with individual divisions which include agricultural, energies and metals. To learn more, sign up:

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About the author


Brian is a marketing strategist with Zaner Ag Hedge Group.  He grew up in Linton, North Dakota; born in 1988 and raised on the family farm.  He attended North Dakota State University and graduated in 2010 with a degree in Agricultural Economics with a focus on commodity marketing as well as a minor in Crop and Weed Science.  After graduating he returned to the family farm for the next five years before pursuing a career in commodity marketing.  Brian works with grain and livestock producers and end users of all sizes across the United States helping them develop risk management strategies. As a former producer who hedged through Zaner, Brian brings a unique perspective with vast experience on the client side of this industry. 

Feel free to visit with Brian about any marketing needs or thoughts at (312) 277-0119, bgrossman@zaner.com or follow him on twitter @AgHedgeGrossman

---

Brian Grossman

Market Strategist

Zaner Group, Ag Hedging

(312) 277-0119 -- Direct Line

bgrossman@http://zaner.com/

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