Soybean Commentary
Jan Soybeans close 10 ½ cents higher ($9.96 ½), March 10 ½ cents higher ($10.05 ¼) and July 11 cents higher ($10.21 ¾)
Jan Meal closes $2.3 higher ($309.8),March $2.6 higher ($313.9) and July $2.2 higher ($319.4)
Jan Bean Oil closes 50 pts higher ($35.27), March 51 pts higher ($35.49) and July 52 pts higher ($35.96)
Weekly Soybean Export Inspections – 1.457 M T. vs. 1.100-1.400 M T. expected
A lack of follow through selling from last week’s dismal finish in beans and meal brought about short covering on Monday. Bean oil found support from inter-market spreading (against short meal) as well as an improving palm market. There is still chatter out there around growing conditions in Argentina (some areas too wet, some too dry). I’ll buy into a “too dry” scenario but not “too wet”. Last year the bean market tried to rally on “too wet” conditions in Argentina only to roll over. Conditions in Brazil continue to be quite good as harvesting is starting to hit stride in their number 1 producing state of Mato Grosso. I’m hearing of yield reports that are comparable to that of those in the US. Weekly export inspections were deemed solid based on expectations. As we
move forward into Jan, Feb, I have to think that export sales and shipments will begin to decline as importers begin to focus on Brazilian origin.
Despite the idea that index fund rebalancing is expected to be minimal this week it did aid in today’s short covering rally. Trade focus should shift to what the USDA may have to say on Thursday, the 9th. Here are the trade guesstimates according to the Reuters news wire (vs. previous month’s ideas) – production – 4.374 billion bu. (4.361), yield – 52.7 bpa (52.5), harvested acres – 83.013 million (83.047), US carryout 468 million bu. (480), World carryout – 82.58 M T. (82.85), Argentine bean production – 56.48 M T. (57.0), Brazilian bean production – 102.4 M T. (102.0) and Quarterly Stocks – 2.935 billion bu. (year ago 2.715)
Changes in the interior soybean cash market are all about location. Processors in the central and east Midwest show the best bids as Board crush margins have been creeping higher. River bids are showing signs of waning. The gulf market is relatively firm but showing signs of waning. Soybean spreads ran steady to softer on the day. Offers to sell cash soybean meal are still looking for friends. Meal spreads, March forward, ran firmer on the day but old crop lost ground to the new crop.
I get the impression no one wants to sell the soybean complex in the hole ahead of Thursday’s USDA data. CONAB will be out early Tuesday morning. My opinion is that we could see slight bumps higher in production given what I perceive as good growing conditions in the prominent growing areas. Between these two factors I’m thinking the complex will continue to be a choppy trading affair between now and Thursday. For those of you that have the itch to trade every day between now and Thursday all I can suggest is to fade inter-day extremes for short term trades.
Daily Support & Resistance for 01/10
March Beans: $9.96 – $10.14
March Meal; $311.0 – $317.0
March Bn Oil: $35.10 – $35.80
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.