The Van Trump Report

Soybean Thoughts… 02-04-20

Soybean traders continue to debate the risk and uncertainty of the coronavirus. I hate to sound like a broken-record the past several sessions but I believe the virus will continue to be a fairly significant headwind and obstacle we hadn’t accounted for. the problem is we have no idea how long this storm will last? I heard some talk circulating in the equity markets that the virus might not peak until April, which means there could still be a great deal of doom and gloom surfacing in the media and being digested by the headline trading algo’s and quants. As a spec, I just don’t want to battle or play that game as I feel I have no edge whatsoever, hence I elected to move to the sideline. As a producer, I remain patient, but I’m certainly more nervous about price appreciation than I was two weeks ago. Weather continues to cooperate in South America and the Brazilian harvest is moving along at a good clip, meaning there will soon be more export competition in the global marketplace. Keep in mind, several sources have been bumping their Brazilian crop estimate higher based on improved conditions and better than expected yields. Technically, traders are paying very close attention to the charts and the fact open interest has been jumping higher on the break, telling me more bears are jumping into the water. I worry that macro trading funds looking to hedge against the fallout in China will cross-hedge via short soybean or short commodity type strategies.

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