Soybean Commentary
March Soybeans close 6 cents higher ($10.66 ¾), July 6 ½ cents higher ($10.85 ¾) and Nov 5 cents higher ($10.42 ¼)
March Soybean Meal closes $0.9 lower ($389.3), July $1.0 higher ($391.4) and Dec $1.6 higher ($371.7)
March Soybean Oil closes 5 pts lower ($32.01), July 9 pts lower ($32.40) and Dec 7 pts lower ($32.85)
Weekly Soybean Export Inspections – 990.1 K T. vs. 600 k – 1.000 M T. expected
Some rain in the drier areas of Argentina on Sunday kept the soybean and soybean meal markets under wraps on Monday. Sunday night saw prices come in firm and then sell off. Lows of the day came during the day session but spec interest had prices bouncing noticeably off of those lows. Supposedly there are some additional chances of rain in the drier areas of Argentina later this week. If I didn’t know better the last 3 days was about shrinking Board crush margins. Last Wednesday the May Board crush traded as high as $1.78; today it traded as low as $1.39. On Thursday CONAB will update us with their latest ideas on Brazilian soybean production – average trade guesses from Bloomberg are suggesting 113.9 M T. vs. 112.0 last month. I’ve seen Brazilian guesstimates as high as 117.0 plus. USDA guesstimates for US soybean carryout average out to 529 million bu. (-1) while the average guess for the World soybean carryout is 95.5 M T. vs. 98.1 last month. The average trade guess for the Argentine soybean crop is 48.5 M T. vs. 54.0 last month. I’ve seen Argentine trade estimates as low as 40.0 M T.
The interior cash soybean market shows a steady to easier tone. River houses are having problems loading due to flooding. Processors are trying to protect the lofty crush margins. The Gulf is firm due to the logistical problems the river houses are having. Soybean spreads ran flat within the current crop year while old crop gains on the new crop. Interior cash meal is under pressure from adequate supplies. Export prices for cash meal stay stout. Meal spreads saw small losses all the way out to the new crop.
Friday’s high in May soybean meal was $404.0 while today’s low was $385.8. This $18 range was due to overbought as well as the presence of some rain around. Today’s trade in soybeans was an inside day of Friday. Given the inability to further advances does it suggest we have stopped the bleeding in Argentina’s crop size? I believe it does for the time being. I sincerely doubt the USDA will adopt the extreme numbers that have been bouncing around recently; Brazil’s crop size increases and Argentina’s crop size decreases. As of this writing my bias is that soybeans and soybean meal will move into a consolidation mode prior to Thursday data. Any extreme moves between now and then will probably get faded. What about bean oil that continues to get the short end of the stick? Expect a minor trading range affair to develop between last week’s high and low.
Daily Support & Resistance for 03/06
May Soybeans: $10.65 – $10.85
May Soybean Meal; $384.0 – $400.0
May Soybean Oil: $31.95 – $32.50
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