Soybean Commentary
March Soybeans close 5 cents higher ($10.26 ½), July 4 ¾ cents higher ($10.47), and Nov 3 cents higher ($10.25)
March Soybean Meal closes $3.2 higher ($376.5), July $2.8 higher ($376.6) and Dec $1.9 higher ($360.4)
March Soybean Oil closes 32 pts higher ($31.86), July 30 pts higher ($32.22) and Dec 30 pts higher ($32.72)
Weekly Soybean Export Inspections – 960.0 K T. vs. 750 K – 1.100 M T. expected
Despite seeing rains over parts of the Argentine growing areas of concern the trade chose to focus on the forecasts going forward; at least for the Monday night session and the first half of Tuesday’s day session. Forecasts that came out Monday suggested a distinct dry bias going forward. Noon updates on Tuesday suggested slightly better moisture potential for the two week forward time frame. Granted meal and soybeans finished higher on the day their respective closes favored the low side of their daily trading ranges. Bean oil managed to catch a bid with the intra-day sell-off in meal despite a lower palm market.
What changes that were seen in the interior soybean basis were easier. The interior soybean basis has shown an easier tone since mid last week. The Gulf does not appear to be anything special since the trend in exports has been declining. Both the interior and export meal basis continues to stand in as they play “the what if game” around the Argentine growing conditions. Spreads ran steady to slightly firmer within the crop year (both beans and meal) and bull spreads, old crop vs. new crop, continue to work. I do have to note that despite the old crop/new crop spreads working they finished noticeably off of the day’s earlier highs. Option expiration for March beans is not clear to me as open interest is not all that great and the strikes carrying the great open interest are below current values. The big open interest in the March bean calls are the $10.00 and the $10.20. The march bean puts carrying the largest open interest are the $10.00, the $10.10 and the $10.20. If the old adage is true about futures gravitating to the option strikes with the greatest open interest it suggests March beans are in for a further tumble as move through the week.
Okay – beans and meal finish higher but given where they are in proximity to the day’s lows vs. the day’s highs it was not a very gratifying close to those that decided to chase the rally. Closing below opening ranges has been known in the past to attract additional selling. I had $10.35 of so as a target for March beans; we traded through it but finished noticeably below it. Weekly meal charts have been suggesting $285.0 or so starts resistance; it was challenged and the market was turned away. My bottomline; Tuesday’s price action is suggesting we have gone high enough for now. With that said don’t be surprised to see bean oil get a left-handed boost from the unwinding of long meal/short bean oil spreads.
Daily Support & Resistance for 02/21
March Beans: $10.12 – $10.34
March Meal; $368.0 – $382.0
March Bn Oil: $31.50 – $32.20
The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.