Soybean Commentary
July Soybeans closed 19 cents lower ($9.96 ¾), August 18 ¾ cents lower ($10.03 ¼) & Nov 15 ¾ cents lower ($10.09)
July Soybean Meal closed $5.7 lower ($376.6), August $5.1 lower ($375.0) & Dec $4.8 lower ($369.6)
July Soybean Oil closed 53 pts lower ($30.59), August 52 pts lower ($30.71) & Dec 45 pts lower ($31.39)
Weekly Soybean Export Sales – old crop vs. 300-600 K T. expected – new crop vs. 100-400 K T. expected
Weekly Soybean Meal Export Sales – old crop vs. 100-300 K T. expected – new crop vs. none expected
Weekly Soybean Oil Export Sales – old crop vs. 10-40 K T. expected – new crop vs. none expected
On April 4th, in the middle of the night, China announced the possibility of imposing tariffs on US soybean imports. July soybeans made a low of $9.94 ½ that night. By April 13th July soybeans had managed to rebound back to $10.78. Since then July soybeans have been trending lower in an erratic fashion. Today, May 16th, July soybeans came within 4 ¼ cents of that low. China has yet to impose any tariffs on US soybean imports but then again China has not bought any US soybeans in the aforementioned time frame. Adding to this China has also slowed down their buying of Brazilian soybeans. With that said Brazilian soybeans are now cheaper to source vs. US origin. As we speak China and the US are in the midst of “tariff trade talks”. I have not heard one way or the other as to how these discussions are going. Is this an instance of “no news is bad news”? Adding to Wednesday’s poor soybean performance are sagging product prices. Soybean meal prices have broken down through interim trendline support that has been in effect since mid-March. The upflagging effort that has been in the soybean oil market since the 1st of May is breaking down. I have to think the softness in the product markets is a direct result of the larger than expected NOPA crush data that was announce on Tuesday. Last but not least – current weather conditions suggest soybean planting is rolling along.
Interior cash soybean markets if not steady are higher. Given the interim slide in the flat price that started around the 1st of the month cash month movement has come to a screeching halt. Export values have also been inching higher. Unfortunately futures’ spreads have not been following the cash markets as spreads have been going the route of the flat price. Interior cash meal markets have been relatively quiet while the export market for meal continues to show a firm bias. Like soybean spreads soybean meal spreads have been under the gun along with the flat price. When spreads move with the flat price and almost contrary to the cash markets tells me the spec is the driving force and not the commercial faction.
So – will July beans hold the April 4th low? Soybean meal is nowhere as weak as soybean prices. That difference explains the stout crush margins. If crush margins can stay stout the soybean market, I think, will eventually come back. The key word here is “eventually”. Hopefully we will hear some word from Washington as to the “tariff talks” sooner vs. later. The outcome of these talks will go far in determining if the spec long gets totally flushed out of his longs or not.
Daily Support & Resistance for 05/17
July Soybeans: $9.94 (?) – $10.14
July Soybean Meal; $373.0 (?) – $383.0
July Soybean Oil: $30.35 – $31.20
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.