Are soybeans headed to their all-time highs?

Market Pulse: Aug 29, 2011

Fundamentals

Fundamental outlookBull market correction — Soybean prices are in a consolidation mode, but the longer-term trend remains bullish with the USDA's recent cut in its U.S. production, U.S. and global carry-over estimates and the tight U.S. 2011-12 stocks/use ratio of 4.9%. However, global soybean supplies are adequate with the 2011-12 world stocks/use ratio near average at 23.2%.

Fundamental outlookBear market correction — The dollar remains in correction mode as the unresolved European debt crisis and fragile global equity markets keep the safe-haven demand strong for the dollar. However, the dollar’s longer-term trend remains bearish because of:

  1. The U.S. credit downgrade and the U.S. debt situation in general
  2. Repatriation demand for the yen in the wake of Japan’s earthquake crisis
  3. Weak U.S. economic data
  4. Poor U.S. interest rate differentials with the Fed on hold until at least mid-2013
  5. The intractable U.S. current account deficit

Have a prosperous trading week.

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