Soybean Supplies Are Critically Tight

Supplies of soybeans are becoming tighter as the end of season supplies dwindle down to levels where farmers are unwilling to part with them. This could lead to a very wild ride on the July soybean futures contract.

The front month, July contract, is in a position where supplies are hard to find and prices could make a sharp move higher or lower going into contract expiration. The July contract closed at $12.01 on Friday, while the November contract closed at $9.91. The November contract is not priced as high, because the season’s crops will be harvested by November and new supplies will become available.

The important USDA Acreage report will be released Tuesday morning. This will detail the final numbers on how many acres were planted this year. Most analysts are expecting an increase of about 2 million acres from the March estimates. A lower number could send soybean prices heading north.

On the charts it looks like soybeans have made a top for the season. Weather conditions in the near future look favorable for soybean crops. However, soybeans need to make it through the critical August period to likely ensure a good crop for the season. Good weather and a 2 million plus increase in acreage numbers will make it very difficult for November soybeans to hit new highs in the next couple months.