Soybean Commentary
May Soybeans closed 9 cents higher ($10.11 ¼), July 8 ¾ cents higher ($10.20 ¼) and Nov 7 ¼ cents higher ($10.25 ¼)
May Soybean Meal closed $3.9 higher ($388.7), July $3.4 higher ($385.9) and Dec $3.1 higher ($378.1)
May Soybean Oil closed 18 pts lower ($30.49), July 18 pts lower ($30.69) and Dec 19 pts lower ($31.42)
Soybeans recoup about 1/3 of Monday’s losses on Tuesday. Short term oversold ideas and a report that China and the US will resume trade talks next week in Washington D.C. allowed for the retracement. The meal market regained a bit of leadership role with its modest rally on Tuesday. Argentina remains a mess with its short crop, labor issues, and loading problems. Adding to all of this is the excessive moisture that’s occurring in the areas that are ready for harvest. Bean oil was no help on Tuesday as it resumed its weak sister role.
5 of the 9 basis locations that I track saw improvements on Tuesday. Cash soybean movement has ground to a halt with the recent break. Granted Board crush margins have seen a bit of a downside correction they still remain quite stout. No processor worth his salt is going to let that go unnoticed and not stand in for cash soybeans. Soybean spreads bounced back on Tuesday getting back some of what they lost on Monday. The Gulf market for soybeans is showing a firmer tone as it seems we have a bit of competition between processors and exporters as they vie for origination. Offers to sell cash meal in the interior have a mixed look; rail offers read steady to better while truck offers read steady to easier. Meal export offers appear a bit easier. Soybean meal spreads were able to bounce back from Monday’s easing. I have to think given the mess in Argentine there is no way demand for US meal cannot improve.
I’m not sure the soybean market is going anywhere fast ahead of the USDA supply-demand data on Thursday. Traders’ expectations suggest more than ample soybean stocks to meet the demand for both old crop and new crop. We may see additional upside retracement of the recent break just because trade talks are scheduled to resume next week but I don’t think we are going to see a complete retracement. The other day I talked bean oil’s price action looking like an upflag. After Tuesday’s price action it appears it is on the verge of rolling over.
Daily Support & Resistance for 05/09
July Soybeans: $10.10 – $10.30
July Soybean Meal; $382.0 – $391.0
July Soybean Oil: $30.30 – $30.95
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