Soybean Commentary
Jan Soybeans close 19 ½ cents higher ($10.06 ¼), March 20 ¼ cents higher ($10.15 ¼) and July 19 ¾ cents higher ($10.30)
Jan Meal closes $7.0 higher ($315.3),March $7.0 higher ($319.1) and July $6.4 higher ($324.3)
Jan Bean Oil closes 41 pts higher ($34.98), March 40 pts higher ($35.21) and July 39 pts higher ($35.66)
Limited follow through selling from Tuesday’s lower markets had the trade turning to buying on Wednesday. I think one of the keys to Wednesday’s rally was bid the market caught shortly after 7:00 AM – that’s when the Chinese night trading starts. In addition to what I think was technical buying on Wednesday is the chatter around growing conditions in Argentina where some areas are being touted as too dry and some too wet. As far as index fund rebalancing is concerned; not much one way or the other is expected. Looking ahead to the USDA Jan 12th report – maybe a very slight drawdown in US stocks due to better export demand. That could be offset by a higher Brazilian production number.
Most interior soybean basis levels ran unchanged on the day. The Gulf market is holding on to its recent bump higher. Bull spreads were working led by the March contract all the way out to the new crop. Offers to sell cash meal in the domestic market continue to show weakness while the export market for meal is starting to show some interest. Meal spreads were like the soybean spreads – bull spreading all the way out to the new crop.
Today’s outside day (featuring new lows for the move while closing above Tuesday’s high) suggests the soybean market is done going down for now. I think the trade is getting a bit wary of getting the cart ahead of the horse before they see more from Argentina as well as what the USDA may have to say. The meal market, too, has a similar look with its outside day. More importantly is the meal market’s inability to take out its 2 month lows despite being so close to it over the 1 ½ weeks. For the time being bean oil holds against the $34.50 level. This is a level that has been providing support for the past 1 ½ weeks. It too registered an impressive looking outside day. As of this writing it looks like march bean oil may be headed back up to the $36.50-$37.00 level.
Daily Support & Resistance for 01/05
March Beans: $10.04 – $10.25
March Meal; $315.0 – $323.0
March Bn Oil: $34.80 – $35.80
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