Are soybeans headed to their all-time highs?

Market Pulse: Aug 29, 2011

Could be with a possible “perfect storm” coming from a dropping U.S. dollar.

Last week November 2011 soybeans opened at 1375½ and closed the week at 1423½. The U.S. dollar last week opened at 74.140 and closed the week at 73.869. A close below 73.500, the most recent solid chart support, could bring the U.S. dollar closer to the lows we saw back in 2008. Does anyone remember a U.S. Dollar Index at 71.000? When the dollar was trading there, where were soybeans? That’s correct, at their all-time highs over $16.00!

We see a deterioration of the 2011 U.S. soybean crop because of hot and dry conditions with 59% of the crop in good-to-excellent condition as of Aug. 21, down -2 pts w/w and -5 pts y/y. We also saw the USDA’s Aug. 11 cut in its U.S. soybean production estimate for this year to a two-year low of 3.056 billion bushels. What would a perfect storm be without Chinese demand? We see increased Chinese demand after July when Chinese soybean imports rose +24% m/m and +7% y/y to 5.35 MMT, their highest level this year.

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