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Soybean Meal's Excellent Journey To The Upside


  • Soybeans have rallied because of the crush.
  • Dry conditions in Argentina.
  • Soybean meal is the primary ingredient in animal feed.
  • Meat prices could get volatile.
  • A rally before the 2018 planting season gets underway in the world's leading producing nation.

Each year is a new adventure in the agricultural sector of commodities markets for three reasons. First, crops do not last forever, and even during periods where carryover from recent bumper crop years, they deteriorate and lose potency, taste, and protein values. Second, each year brings new challenges when it comes to weather and growing conditions around the world. Finally, crop disease, logistical issues, and other natural events and acts of God often cause even the best-laid plans of men to go awry.

After five straight years of bumper crops in the United States and around the world, inventories are high and at record levels in the case of some agricultural products. However, five years do not guaranty a sixth, and the future is the hands of Mother Nature over the coming months as it will be the weather that determines the path of least resistance for prices. The world has become addicted to bumper crop levels each year because of expanding population and wealth. More people, with more money, are competing for finite food supplies each year. In 1960 there were three billion people on our planet, today that number stands above 7.455 billion. Each quarter there are approximately twenty million more mouths to feed on the earth.

The United States is the world's largest producer of corn and soybeans and a leading exporter of wheat. Therefore, the conditions across the fertile plains of the U.S. will be the chief determinate of prices over the coming months. During the winter in the northern hemisphere, crop production continues south of the equator. Brazil, Argentina, and other nations in the southern hemisphere are significant producers of grains. As we head into the 2018 crop year in the United States, grain prices have been edging higher, and recently the price of soybeans has moved above its short-term area of technical resistance even though

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This article was written by

Andrew Hecht profile picture
Weekly commodities commentary and calls, from a Wall Street veteran
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is the #2 ranked author on Seeking Alpha in both the commodities and precious metals categories. He is also the author of the weekly Hecht Commodity Report on Marketplace - the most comprehensive, deep-dive commodities report available on Seeking Alpha.

Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup.

Over the past two decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities.

Andy understands the market in a way many traders can’t imagine. He’s booked vessels, armored cars, and trains to transport and store a broad range of commodities. And he’s worked directly with The United Nations and the legendary trading group Phibro.

Today, Andy remains in close contact with sources around the world and his network of traders.

“I have a vast Rolodex of information in my head… so many bull and bear markets. When something happens, I don’t have to think. I just react. History does tend to repeat itself over and over.”

His friends and mentors include highly regarded energy and precious metals traders, supply line specialists and international shipping companies that give him vast insight into the market.

Andy’s writing and analysis are on many market-based websites including CQG. Andy lectures at colleges and Universities. He also contributes to Traders Magazine. He consults for companies involved in producing and consuming commodities. Andy’s first book How to Make Money with Commodities, published by McGraw-Hill was released in 2013 and has received excellent reviews. Andy held a Series 3 and Series 30 license from the National Futures Association and a collaborator and strategist with hedge funds. Andy is the commodity expert for the website about.com and blogs on his own site dynamiccommodities.com. He is a frequent contributor on Stock News- https://stocknews.com/authors/?author=andrew-hecht

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

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