Soybean Commentary
March Soybeans close 14 cents higher ($10.25), July 13 ½ cents higher ($10.44 ½) and Nov 12 cents higher ($10.18 ¼)
March Meal closes $1.5 higher ($332.6), July $0.6 higher ($339.4) and Dec $0.1 higher ($332.0) March Bean Oil closes 134 pts higher ($33.69), July 128 pts higher ($34.19) and Dec 123 pts higher ($34.56)
March Soy Complex deliveries – Soybeans 500 (more than expected) – Soybean Meal 249 (less than expected) – Soybean Oil 1059 (expected)
Rumor – It looks like changes being made to the renewable fuels program may include tax credits to the producers of bio-diesel – in this case bean oil producers. This had bean oil prices moving sharply higher which in turn had soybean prices moving sharply higher. Later in the day a White House spokesperson denied any executive order along these lines. Soybean meal tried to go along for the ride but soon became the weak sister of the soy complex and stayed being the weak sister after the rumor had been denied. The rationale (if the rumor was true) is that crushers may start processing for bean oil which in turn creates excessive meal stocks and meal stocks are already excessive. Despite the renewable fuels rumor being denied bean oil was able to hold on to substantial gains. I believe this was in part to the recent idea of bean oil being oversold not only with its flat price but with its spread against soybean meal. Hedge type selling from SA was absent today as they are on holiday – it is Carnival time through tomorrow. The lack of their hedging allowed the flat price to ascend as rapidly as it did earlier in the session.
Few if any changes were seen for the interior soybean basis on Tuesday. The only change that I saw was along the Ohio River (+1 cent). Cash movement has slowed with the recent sell-off. It will be interesting to see if today’s midday spike higher followed by a 20 cents sell off attracted any new sales. Soybean spreads came in fractionally within the old crop while old crop gained only modestly against the new crop. The interior meal basis is trying to show some minor improvement. I’m starting to hear that at selected locations processors are slowing their crush rates due to mounting meal stocks. Meal spreads, too, showed some minor improvement on Tuesday.
Technical analysis only knows price action, not news. The price action we saw in the soybean and soybean meal markets leave a lot to be desired given the highs of the day vs. where we closed. Granted bean oil finished with substantial gains it was still well off of their midday highs. In recent days I’ve talked about how the bean and bean meal markets had moved into a holding phase. Today’s rally vs. its close suggests we can once again attack the levels that have been providing support. If my idea is true for the bean and bean meal markets expect to see bean oil hold up against its recent lows due to inter-market spreading.
Daily Support & Resistance for 03/01
July Beans: $10.30 – $10.55
July Meal; $335.0 (?) – $343.0
July Bn Oil: $33.80 – $34.80
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