Jan soybeans close 3 cents lower ($10.28) March 3 cents lower ($10.39 ½) and July 2¾ cents lower ($10.53 ¼)
Dec Meal closes $1.3 lower ($313.5), Jan $1.1 lower ($315.1) and March $0.8 lower ($319.7)
Dec Bean Oil closes 19 pts lower ($36.57), Jan 19 pts lower ($36.78) and March 20 pts lower ($37.04)
There was a lot of mush-pull going in the soybean complex on Tuesday as we traded back and forth between higher and lower before finishing lower on the day. Everyone is aware of the great demand the soybean market has currently. Given the current growing conditions in Brazil it is thought they will have soybeans available for export as early as January. Argentina is forecasted to see some beneficial moisture late this weekend, early next week. News/rumors out of China talk about soybean processing plants being shut down by regulators due to environmental concerns. This had the Dalian soybean meal rallying to 5 month highs. The US meal market tried rallying on this news a couple of times during the day only to fail to follow through. This news can act as a double-edged sword – If the Chinese can’t crush the soybeans they are importing will they cut back on soybean imports? Will they turn to being an importer of soybean meal – if so Argentina seems the most likely source as they are the cheapest origin? Will they opt for an alternative feed/protein – does that explain Monday’s USDA announced sorghum sale?
The interior soybean basis continues to show a steady to higher bias. The Gulf soybean basis is now about 12 cents higher from where it was one week ago. Despite the stronger Gulf it appears that all it is doing is offsetting the recent weakness in the flat price. One week ago today Jan beans were about 19 cents higher vs. today’s close. The soybean meal basis continues to be a dog as both the interior basis and the export basis continue to be soft. Both soybean and soybean meal spreads continue to have a widening bias.
Daily momentum indicators read lower for Jan beans but we really haven’t gone anywhere since mid-late November. I’m getting the impression that chart bulls will not want to see Jan beans close below the $10.20-$10.15 level as that levels has been deemed support dating back to the latter part of November. Jan meal has been trading between $306 and $330 dating back late October. I’m thinking the meal bulls will not want to see closes below the $310 level. What about bean oil? Jan bean oil has been in a corrective phase for the past 4 days. I don’t think the underlying demand basis (bio-diesel) has gone away but for sure the spec trade got a little bit over extended. If one looks at a chart all by itself it suggests a top may be in place. I see some short term support at the $36.50-$36.40 level. If that levels is taken out a 100-150 point further break cannot be ruled out.
Jan Beans: $10.21 ($10.15) – $10.40
Jan Meal; $311.0 ($309.0) – $319.0
Jan Bn Oil: $36.35 ($36.00) – $37.40
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