Soybean Commentary
Nov Soybeans close 11 cents lower ($9.57 ¼), March 10 ¾ cents lower ($9.77) and July 9 ¼ cents lower ($9.93 ¼)
Dec Soybean Meal closes $2.2 lower ($313.6), March $1.9 lower ($318.8) and July $1.8 lower ($323.5)
Dec Soybean Oil closes 30 pts lower ($32.52), March 28 pts lower ($32.95) and July 26 pts lower ($33.37)
USDA announces 132 K T. soybean sold to China
Weekly Soybean Export Inspections – 894.2 K T. vs. 950 K – 1.200 M T. expected
Soybean Crop Ratings & Progress – 60% GE vs. 60% expected vs. 74% year ago – 80% Dropping leaves vs. 78% 5-year average – 22% Harvested vs. 25% expected vs. 26% 5-year average
Despite the lower than expected Quarterly stocks figure on Friday (lower old crop carryout/lower new crop carryin) the rally that ensued failed to follow through. The rationale for the failure is about the idea of a continued strong national yield along with the idea we may see a bump up in harvested acres when the USDA updates crop size on the 12th. Weekly soybean export inspections came in below expectations. Weekly export inspections are running about 540 K T. ahead of last year’s pace and export sales are slowly but surely catching up with last year’s pace. This is Golden Week in China so new export sales (beyond what we saw this AM) this week are not expected.
Most interior soybean basis bids remain on the defensive. I saw a couple of Illinois River locations improve their bids but they still remain ugly. Problems on the river systems (low draft levels) are keeping freight rates highs along with Gulf bids. Rain is expected to leak into Illinois later this week. Many are anxious to see if the forecasted moisture alleviates some of the transportation problems. Because of the transportation problems the cash market has become a processor market. With the ongoing harvest coupled with the river problems the processor realizes he is the best market out there so he employing the adage “I’ll let the market come to me; no need for me to go to the market”. The bottomline – the complex’s intra-market spreads leak wider.
Here’s the $64 K question – in the near term will November beans be able to hold the $9.50 level on further sell-offs. The same question holds true for December meal against the $309 level. Bean oil is in an oversold state but the price action is such that I can’t tell if the market is going to catch hold. For what it is worth – the long meal/short bean oil spread is almost as overbought as the bean oil is oversold.
Daily Support & Resistance for 10/03
Nov Beans: $9.50 – $9.66
Dec Meal; $309.0 – $317.0
Dec Bn Oil: $32.25 (?) – $33.00
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