Soybean Commentary
January Soybeans close 6 ¾ cents lower ($9.75 ¾), March 6 ¾ cents lower ($9.87 ¼), and July 6 ¾ cents lower ($10.07 ¾)
Dec Soybean Meal closes $3.1 lower ($322.9), March $2.9 lower ($328.9) and July $2.4 lower ($333.7)
Dec Soybean Oil closes 4 pts lower ($33.36), March 1 pt lower ($33.60) and July 5 pts lower ($33.87)
The USDA announces 492.0 K T. of soybeans previously sold to unknown is now China – additionally, 168.3 K T. soybeans sold to unknown
CONAB suggests the Brazilian soybean crop is 109.2 M T. vs. 107.5 last month
USDA US Soybean Projected Carryout 445 million bu. vs. 438 expected vs. 425 last month
USDA World Soybean Projected Carryout 98.32 M T. vs. 97.82 expected vs. 97.90 last month
At first look the US soybean projected carryout was deemed mildly bearish (exports were cut) as was the World projected soybean carryout. The initial reaction was negative but soybeans quickly bounced higher on the coattails of a rallying soybean oil market. Soybean oil use for bio-diesel was increased by 500 million lbs. but that number was offset by lower FFI (food, feed & other industrial use) and lower exports. In the end the soybean oil carryout was left unchanged. All of the demand data involving soybean meal was left unchanged as well. The bottom line to all of this is that the attempt to rally soybeans failed and the soybean oil rally (at one time 30 pts higher) rolled over to fractional losses on the day. Soybean meal remained a slug throughout all this. What’s impacting the US soy complex (in addition to the increasing US carryout) is the idea that the Brazilian crop is increasing in size and Argentina is looking at crop saving rains over the next 5-10 days.
Not much happens with the interior soybean basis; The Ohio River off 1 cents and an Illinois River location up 2 cents. The Gulf basis for soybeans is stable at best but that is at relatively soft looking levels. March beans gained fractionally on May but it was softer after that. Offers to sell cash meal – I get the impression they are having a hard time giving this stuff away. Meal spreads were soft all the way out to the new crop.
I can make a case that the entire soy complex is flirting with technical interim support. The “however” is that the price action getting here leaves a lot to be desired. We’re not crashing down to these levels; we’re grinding down to these levels. In my eyes this type of price action suggests the potential to go much lower. The next big surprise for the complex won’t come until the weekend when we’ll size up Argentina’s rainfall and its subsequent forecasts.
Daily Support & Resistance for 12/13
Jan Beans: $9.68 – $9.86
Jan Meal; $320.0 – $330.0
Jan Bn Oil: $33.00 – $33.80
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