Anyone familiar with soybeans fundamentals?

[Cutten]

What would you normally expect to be the consequences (if any) for soybeans prices in response to the mad cow outbreak, and subsequent fall in corn (cattle feed) prices? Same question for wheat.

I'm interested because the beans opened down on the news, but rallied straight up and closed much higher, near the highs of the day. I want to know if this MCD affair would normally be considered "bad news", or if it is irrelevant and the initial gap lower was just a knee-jerk reaction in sympathy with corn.

P.S. I'll give a prime cut of steak for the best answer

 

[Cutten]

Also, if anyone knows good books, websites, or other sources on agricultural fundamentals in general, please let me know, thanks.

 

[Free Thinker]

soybeans are mostly people food while most of the corn in this country is fed to livestock.

 

[Pabst]

Quote from Cutten:

What would you normally expect to be the consequences (if any) for soybeans prices in response to the mad cow outbreak, and subsequent fall in corn (cattle feed) prices? Same question for wheat.

I'm interested because the beans opened down on the news, but rallied straight up and closed much higher, near the highs of the day. I want to know if this MCD affair would normally be considered "bad news", or if it is irrelevant and the initial gap lower was just a knee-jerk reaction in sympathy with corn.

P.S. I'll give a prime cut of steak for the best answer

You hit it on the head. Soybeans Wens. open was sympathetic to Corn and Wheat. What may be bullish for Beans in this fiasco is the notion of using Soy Meal to feed chicken and pork with instead of beef by-products that are used to "enhance" the white meats. Keep in mind though Cutten, while Corn definitely took it on the chin vs. Beans off the news, Corn also rallied sharply off its lows (from about -16 cents to only down 5 cents). The relationship between Beans and Corn is as wide on a pct. basis as it's ever been. Corn never really participated on this three month old surge in Beans. Wednesday may have been a capitulation in that spread. If Beans remain "too high" (better than 3-1 in price) in relation to Corn, farmers will then grow Beans instead of Corn to capture the disparity.

 

[tmb]

Quote from Cutten:

Also, if anyone knows good books, websites, or other sources on agricultural fundamentals in general, please let me know, thanks.

I find the "@griculture Online" site interesting

www.agriculture.com

though it's not just about agriculture fundamentals.

 

[waggie945]

Huge Bull Market since August lows, based on a lot of buying from China, China, China . . . Be careful trading these puppies, as Pabst can tell you, they can RIP your head off in a heartbeat!

http://futures.tradingcharts.com/chart/SB/W

 

[Cutten]

Quote from Pabst:

You hit it on the head. Soybeans Wens. open was sympathetic to Corn and Wheat. What may be bullish for Beans in this fiasco is the notion of using Soy Meal to feed chicken and pork with instead of beef by-products that are used to "enhance" the white meats. Keep in mind though Cutten, while Corn definitely took it on the chin vs. Beans off the news, Corn also rallied sharply off its lows (from about -16 cents to only down 5 cents). The relationship between Beans and Corn is as wide on a pct. basis as it's ever been. Corn never really participated on this three month old surge in Beans. Wednesday may have been a capitulation in that spread. If Beans remain "too high" (better than 3-1 in price) in relation to Corn, farmers will then grow Beans instead of Corn to capture the disparity.

Interesting. I also noticed the Corn bottoming on the opening print, and it is up again today. Soybeans are a cent from limit up!

I guess I should have traded it - I thought it might be a classic case of a bullish reversal/shrugging off on "bad" news, but I don't have the knowledge to know if was really bad news or not. It's easy to get blindsided if you don't really know the fundies.

I guess it's a bit embarrassing having a username "Cutten" and not knowing jack about the Chicago grains and beans!

 

[Pabst]

Quote from Cutten:



I guess it's a bit embarrassing having a username "Cutten" and not knowing jack about the Chicago grains and beans!

ROFL!! But for a guy in the U.K. to be interested in grains is neat in it's self! Good luck!!!

 

[Cutten]

I see that hogs and the legendary Pork Bellies are also limit up today ("hogs" is a very cool name for "pigs", btw).

Funny, I was thinking on Xmas eve, how come pork products are down when from now on no one is going to touch beef with a bargepole? Was the market just in "knee-jerk" mode or was there a legitimate reason to fear falling demand in beef substitutes?

I haven't checked on chicken futures yet, I guess they are limit up too? Australian lamb futures, anyone?

 

[jessie]

Beans have rallied largely on the basis of soymeal, which will be fed as a replacement for the bone meal and animal protein which is a large component of animal feed. Cattle will likely be fed longer than is typical, held on feedlots until the BSE mess hopefully blows over, and that will further increase demand.
Jessie