Soybean Commentary
Nov Soybeans close 12¾ cents lower ($9.75 ¼), March 13 ½ cents lower ($9.96) and July 12 ¾ cents lower ($10.13 ½)
Dec Soybean Meal closes $3.4 lower ($311.8), March $3.6 lower ($317.3) and July $3.7 lower ($322.2)
Dec Soybean Oil closes 23 pts lower ($35.14), March 24 pts lower ($35.51) and July 23 pts lower ($35.95)
Weekly Soybean Export Sales – 1.160 M T. old crop vs. 1.300-1.800 M T. expected – 0.4 K T. new crop vs. 0-50 K T. expected
Weekly Soybean Meal Export Sales – 212.9 K T. old crop vs. 100-300 K T. expected – no new crop vs. none expected
Weekly Soybean Oil Export Sales – 15.9 K T. old crop vs. 8-30 K T. expected – no new crop vs. none expected
The USDA lowers production by 6 million bu. I’m not sure where the reduction came from as the national yield was left unchanged as was harvested acres (I believe its called tweaking the numbers). All US soybean demand data was left unchanged. The lower production figure coupled with the unchanged demand data leads us to a 5 million bu. reduction in carryout; this was deemed not a big deal. The bigger deal was World ending stocks increasing by 1.85 M T. These projected ending stocks now sit at 97.90 M T.; the largest I have ever seen.
In recent days the trade had been favoring the bull side of the soybean market. Today’s World data from the USDA pretty much squelches that idea from a supply-demand point of view. So what’s left out there to try giving us higher soy prices? It’s going to take weather scares from SA and at the present time we don’t have that. With that said recent longs will go into a liquidation mode until something new that has bullish ramifications comes along.
Prior to the USDA report interior cash soybean markets continued to show a steady to firming bias. It will be interesting to see how the cash markets react to the report now that the recent attempt at trying to establish a pseudo bull market has fallen by the wayside. The export market appears to be stable at best. Jan forward soybean spreads were noticeably under pressure following the USDA report. Offers to sell cash soybean meal continue with a depressed look. Meal spreads within the current crop year ran steady to fractionally lower.
Up until today the soybean market had been in a well-defined up channel. Today’s action suggests the market is breaking down. Soybean meal is still in a minor sideways mode but it does appear to be on verge of breaking down. Closes below $309.0 (Dec) will confirm. Soybean oil gives us a minor reversal for its current rally as we registered new highs for the rally yet closed lower. I have to think that if SA weather stays conducive to crop development the entire complex will move into a liquidation mode.
Daily Support & Resistance for 11/10
March Beans: $9.88 – $10.03
Dec Meal; $309.0 (?) – $315.5
Dec Bn Oil: $34.60 – $35.35
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