Soybean Commentary
March Soybeans close 4¾ cents lower ($10.70 ¼), July 4 ¼ cents lower ($10.83 ¾) and Nov 1 ½ cents higher ($10.29 ¾)
March Meal closes $2.9 lower ($348.2), July $1.3 lower ($350.8) and Dec $1.1 higher ($336.0)
March Bean Oil closes 14 pts lower ($35.44), July 14 pts lower ($35.90) and Dec 10 pts lower ($35.27)
Weekly Export Sales – Soybeans – old crop vs. 400-600 K T. expected; new crop vs. 0-100 K T. expected – Soybean Meal – old crop vs. 100-200 K T. expected; new crop vs. none expected – Soybean Oil – old crop vs. 5-20 K T. expected; new crop vs. none expected
The Buenos Aires Grain Exchange (BAGE) cuts another 100 K hectares (247 K acres) of planted soybean acres. Planted soybean acres are now down about 988 K acres from their original intentions. When this acreage update was announced the soybean market yawned and eased a bit. Forecasts going forward for Argentina continue to talk about a drying trend developing. It seems like the trend of excessive moisture is now behind them. With that said the focus shifts to the Brazilian harvest that is just getting under way and the talk there is about big yields.
The trend in the interior soybean basis continues to be lower. The Gulf basis eases along with the interior’s easing. Soybean spreads within the current crop year were easier; noticeably losing ground to the new crop. The easing of the old crop/ new crop spreads is considered a correction of the spike high we saw on Tuesday. As of this writing it looks like that spike higher on Tuesday was just a knee-jerk reaction and now the market has nothing to justify it. The interior meal basis continues to grind lower – so does the meal basis for export. Meal spreads act like soybean spreads – easier within the current crop year; old crop losing noticeably to the new crop.
So far the price action in soybeans and soybean meal is just consolidation reacting to the recent rally that started last Thursday. So far it would be speculation that a top is in the making. I do believe the bull move is running out of supporting issues. So what kind of price action would suggest a top – at least a close below Wednesday’s low. This holds true for both beans and meal. Soybean oil acts like it has lost its enthusiasm to rally – weekly bean oil charts are suggesting an interim “head & shoulders” top has been formed.
Daily Support & Resistance for 01/20
March Beans: $10.60 – $10.80
March Meal; $344.0 ($341.0) – $352.5 ($354.0)
March Bn Oil: $35.00 – $36.00
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