Nov Soybeans close 7 ¾ cents higher ($9.89 ¼), Jan 7 ¾ cents higher ($9.98 ½) and March 8 ¼ cents higher ($10.05 ½)
Dec Meal closes $2.9 higher ($311.9), Jan $3.0 higher ($313.8) and March $3.0 higher ($315.3)
Dec Bean Oil closes 8 pts higher ($34.79), Jan 7 pts higher ($35.05) and March 8 pts higher ($35.24)
USDA announces 132 K T. soybeans sold to China – 135 K T. soybean meal to Philippines
Weekly Soybean Export Inspections – 2.623 M T. vs. 2.500-2.800 M T. expected
So which side of the equation (supply vs. demand) will lead the direction of the complex after we see what the USDA has to say on Wednesday? Two weeks ago it was the demand side of the equation; last week it was the supply side of the equation. This week the demand side of the equation is in the lead as it took its cue from the USDA daily export announcements. As of this writing my idea is that demand will only offset part of the increase in supply which will lead us to a slightly higher carryout. Everything I read so far suggests SA is getting planted in a very timely manner and not much is being forward sold. The news wires run a story that suggests only 25% of the Brazilian crop has been forward sold vs. 40% one year ago. AS far as Wednesday’s USDA report is concerned – the trade is expecting to see the national soybean yield increase by 0.6 bpa leading to increase in production by 45 million bu. This is leading to ideas that the US carryout will increase by 25 million bu. while the World projected ending stocks will decline by 380 K T. (doesn’t make much sense to me that the US carryout is higher and the World carryout will be lower especially since it is a bit early to fool with the SA numbers).
Trade ideas have the US soybean harvest at 93% completed. The USDA suggests the US soybean harvest is at 93% vs. the norm of 91%.
The US soybean harvest is just about done and that has many locations’ basis improving. The 150 or so deliveries against the November contract continue to bounce around looking for a home. This fact alone keeps spreads within the current crop year slack looking. Crop year to crop year spreads, however, are just starting to show (or trying to show) a bullish bias. This makes sense from the idea that soybean acres will increase noticeably for the next crop year. Offers to sell cash soybean meal continue to be slack looking; meaning looking for a home. Meal spreads ran mostly flat on the day.
Like the corn market I’m not expecting much to happen on Tuesday as we await the USDA numbers on Wednesday. If we take Monday’s trade as a directional indicator we’ll probably be a bit better.
Jan Beans: $9.90 – $10.10 Dec Meal; $308.00 – $318.0 Dec Bn Oil: $34.45 – $35.40
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