Soybeans Commentary

storck

Just My Opinion – Soybeans

Soybean Commentary

May Soybeans closed 6 cents higher ($10.13 ¼), July 5 ½ cents higher ($10.21 ¼) and Nov 6 ¾ cents higher ($10.31)

May Soybean Meal closed $1.3 higher ($390.5), July $0.3 higher ($386.1) and Dec $1.5 higher ($378.7)

May Soybean Oil closed 11 pts higher ($30.98), July 10 pts higher ($31.13) and Dec 9 pts higher ($31.87)

CONAB – Brazil Soybean Production – 116.99 M T. vs. 114.96 M T. April

Weekly Soybean Export Sales – 354.3 K T. old crop vs. 300-600 K T. expected – 278.3 K T. new crop vs. 100-300 K T. expected

Weekly Soybean Meal Export Sales – 90.9 K T. vs. 100-400 K T. expected – -0.6 K T. new crop vs. none expected

Weekly Soybean Oil Export Sales – 45.4 K T. old crop vs. 15-60 K T. expected – 1.0 K T. new crop vs. none expected

Highlights of the USDA Supply-Demand Report – US Old Crop – Increased crush by 20 million bu. resulting in the carryout being lowered being decreased by 20 million bu. – World Old Crop – Increased world production by 1.9 M T., increased carryout by 1.36 M T. – US New Crop – Lowered production by 112 million bu. vs. last year, very aggressive on demand, up 232 Million bu. vs. year ago which in turn offsets the larger carryin vs. year ago all leading to a carryout reduction of 115 million bu. vs. year ago – World New Crop – Total supply increases by 13.6 M T., total disappearance increases by 15.43 M T., carryout decreases by 5.46 M T. (I don’t understand)

At first blush the soybean data appeared bullish and the bean and markets saw a nice rally. Unfortunately the rally failed to hold. I have to think the trade became a bit skeptical of the aggressive new crop demand numbers. The USDA has China importing 103.0 M T. of soybeans next year yet all of the recent rhetoric around Chinese demand has been for lower demand. Does the USDA know something that we don’t as to the ongoing trade dispute?

Processors continue to show the best cash bean bids out there. River locations read mixed as some locations have relatively stout looking bids while others are almost sloppy looking. The Gulf shows an ever so slightly firm bias. Soybean spreads ran soft all the way out through the new crop. The infamous July/Nov once again moves into new contract low ground. Offers to sell cash soybean meal are mixed. Truck offers read steady to softer, rail offers are mostly steady and the Gulf hangs tough. Meal spreads ran lower vs. the July while August forward was mostly steady.

The inability of beans and meal to hold the initial rally off of the report suggests we just don’t have the firepower to sustain a run back to recent highs. The other side of that coin is beans and meal was able to hold on to modest gains. That tells me the bulls are not yet ready/willing to let go of their longs hanging on the hopes of better meal export business. Unfortunately this week’s meal export sales were extremely disappointing. The bulls still want to talk about trade talks between the US and China next week. I’m not sure any set date has been established. As of this writing it comes down to just how long the bulls want to hang on to their “wishing & hoping”. Today’s price action suggests a lower bias form a technical point of view.

Daily Support & Resistance for 05/11

July Soybeans: $10.10 ($9.95) – $10.30

July Soybean Meal; $380.0 ($375.0) – $391.0

July Soybean Oil: $30.70 – $31.50

 

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