Soybean Commentary
Nov Soybeans close 1 cent higher ($9.73 ¾), March unchanged ($9.95) and July unchanged ($10.12 ¼)
Dec Soybean Meal closes $0.5 lower ($311.8), March $0.3 lower ($317.1) and July $0.5 lower ($322.1)
Dec Soybean Oil closes 7 pts higher ($34.75), March 6 pts higher ($35.11) and July 4 pts higher ($35.48)
It was a very quiet trade for the complex on Tuesday as soybeans and products never deviated too far from unchanged. One of the bigger features was the lack of November soybean deliveries as commercial ownership chose to hold on to their inventory vs. losing the carry they have previously locked in. Rains are leaking into the drier areas of Brazil and more is forecasted to come over the next week or so. Some areas in the south, southeast are reported to be excessively wet bit to date it has done little to influence the market. Demand for US soybeans continues to be decent but competition from SA continues to be there.
River locations that feed down to the Gulf continue to show a bias for improving whereas the Gulf is holding steady at best. November gains on its respective spreads reflecting the lack of deliveries. Jan forward spreads ran mostly steady with mixed fractional changes. Offers to sell cash meal continue to suggest processors are having a difficult time finding buyers. Meal spreads ran mostly unchanged within the crop year while old crop gains modestly on the new crop. It has been brought to my attention that the CBOT, starting in Jan 2018, will change the delivery specs on the meal contract. The specs will from 48% protein to 47.5% protein. That furthers the recent talk that this year’s soybean crop is producing lower than accepted protein meal. If this is indeed the case meal deliveries going forward will be scant if any. This sets the stage bullish squeezes whenever delivery time rolls around.
I’m told soybean option volatility is ranging between 10% and 11%. This explains the slow trade; the relatively tight trading ranges. So what is going to change the lack of uncertainty – it will have to come from weather scares out of Brazil and/or dramatic changes within the US Supply-Demand (which I don’t see happening too soon). For the time being we’ll have to live with the slow grinding type trade within the bean and meal markets. Soybean oil will continue to take its cue from the goings on in the bio-diesel sector which as of this writing shows a higher bias.
Daily Support & Resistance for 11/01
March Beans: $9.85 – $10.03
Dec Meal; $308.0 – $315.0
Dec Bn Oil: $34.10 – $35.10
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