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Feb. 3, 2022 By Tyne Morgan, AgWeb.com Soybean prices are racing higher so far this week. Continuing on its price run that started late last week, March soybeans traded more than 30 cents higher Wednesday morning, with prices above $15.50. And that's a comeback, considering prices popped in the overnight trading hours, before falling back. And then regaining strength again. "It feels like the speculators have the upper hand," says Pete Meyer of S&P Global Platts. "Overnight Wednesday we saw a 20-cent spike, a total retracement of that move within minutes, and a subsequent push back to the highs. These sorts of moves define the term 'emotional market.' The fear of missing out (FOMO) is becoming more obvious." Is this a Weather Rally? So, what fundamental factors are driving the rally to start February? It isn't the time of year you typically hear of a 'harvest rally,' but that's exactly what may be taking place, just from issues farther south. "Analysts continue to slash their estimates for Brazil's soybean crop," says Joe Vaclavik of Standard Grain. "Generally speaking, traders believe that more export demand will come to the United States." It seems Brazil may be getting most of the credit for the rally this week, points out weather forecasts, and crop projections haven't shifted that much in just a matter of days. "There's certainly a lot of head scratching going on this week, if you exclude the soybean perma-bulls who are enjoying a victory lap," says Meyer. "Technically, soybeans look great, so the assumption is that money flow is playing a big part in this week's rally, which is also a counter-seasonal rally as it occurs during Brazilian harvest. Independent analysts have been cutting their Brazilian production estimates for quite some time, so recent estimates as low as 125M MT should not have been considered new news. In our opinion, the crop still has the potential of producing a number in the low 130s." To view the complete report, click here. Tweet |
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