Soybean Commentary
Nov Soybeans close 13¾ cents lower ($9.63 ½), March 12 ½ cents lower ($9.85 ½) and July 12 cents lower ($10.03 ½)
Dec Soybean Meal closes $3.2 lower ($311.3), March $3.2 lower ($316.9) and July $3.2 lower ($321.7)
Dec Soybean Oil closes 48 pts lower ($34.33), March 48 pts lower ($34.71) and July 48 pts lower ($35.16)
USDA announces 135.0 K T. soybean meal sold to the Philippines
Weekly Soybean Export Inspections – 2.087 M T. vs. 1.700-2.400 M T. expected – Cumulative to date – 16.955 M T. vs. 19.263 M T. year ago
Weekly Soybean Crop Progress – 93% harvested vs. 95% expected vs. 95% 5-year average
Flat price soybeans crash through an uptrend line that had been in effect dating back to mid-August. Good weather in SA conducive to getting the crop in and growing is the fundamental rationale. A sharp break in bean oil (thank you palm oil) added to the selling. The meal market has yet to break out down out of its recent sideways but it doesn’t look like it would take much to register some interim sell signals. Coming into today implied volatility had a 9 in front of it. With soybean volatility that low suggests little to no uncertainty at this time. With that said the rationale for ownership, at lest for the near term, is out the window.
The interior cash soybean basis if not steady is grinding higher now that harvest, for all practical purposes, has come and gone. The Gulf, too, if back to more normal levels given the passing of harvest. Despite the better looking basis levels soybean spreads widened on Monday led by the soon to expire November contract. Through the delivery period deliveries were not that great but consistent as the 130 or so tickets had trouble finding a home. Offers to sell cash soybean meal remain near historically depressed levels. Meal spreads ran steady on the day.
Monday’s sell-off in March soybeans has this market targeting the $9.60 level. I doubt it comes all at once given the low volatility levels. soybean meal futures are barely holding on to its recent interim sideways mode. Get Dec meal below $310 and a challenge of the $300 level comes into view. Soybean oil has moved into a full blown correction phase as it has taken out the support line of its recent channel higher. Since bean oil has its own fundamental story (bio-diesel) I’m not advocating selling the current break but rather wait for a rally back to its newly established interim resistance.
Daily Support & Resistance for 11/14
March Beans: $9.78 – $9.94
Dec Meal; $309.0 (?) – $314.5
Dec Bn Oil: $34.05 – $34.90
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