Soybeans Commentary

storck

Soybeans – Just My Opinion

March Soybeans closed 1 ¾ cents higher ($9.20 ¼), July 2 ½ cents higher ($9.47 ½) & Nov 2 ½ cents higher ($9.60 ½)      

March Soybean Meal closed $1.1 lower ($309.5), July $0.9 lower ($317.5) & Dec unchanged ($323.2)

March Soybean Oil closed 25 pts higher ($30.38), July 24 pts higher ($30.98) & Dec 23 pts higher ($31.49)

USDA announces 2.603 M T. of soybeans sold to China – 274.0 K T. of soybeans sold to Unknown – brings 2-day total to 3.489 M T.

It was another ho-hum day for soybean trading despite the recent export sales announcements; they were considered old news. Since last Friday it was expected that China would buy up to 5.0 M T. of US soybeans following the trade meeting that ended on January 31st. Bean oil carries the ball of the product markets as the meal market continues to dog it. Nearby soybean meal prices traded to a low level not seen since late December. Bean oil prices after seeing a near 100 pt drop from Friday’s highs came within 23 pts of that high today. We are not expecting to see any further China sales’ announcements for the next week or so as they are their Lunar New Year holiday. I’m not sure the trade is so gung-ho about Friday’s USDA reports as I’m not sure the USDA can adjust the soybean data enough to make it even quasi-bullish looking. Also; if the soybean market is going to sustain any type of a bull market the meal market will have to participate. So far the meal market has a rough road ahead trying to compete with Argentina. Harvest in Brazil is ahead of last year’s pace and the line-up at Brazilian export locales is greater vs. one year ago. It makes me think the recent Chinese purchases may be a “one and done” deal.

Most interior soybean basis locations read better; at worst steady. I’ll grant you crush margins are the best but they aren’t the worst; movement to the processor just hasn’t been there. This holds true as well for the river locations that feed to the Gulf. Gulf bids have jumped in response to the recent Chinese business as well as the recent logistical problems. Despite the better looking basis levels soybean spreads continue to show a depressed look. Offers to sell cash soybean meal in the domestic market, rail or truck, remain nothing to write home about. The Gulf market for meal is trying to poke its nose up but I have to think that’s more about a slowdown in product vs. market making demand. Meal spreads continue with their sideways to lower trend.

Is it just me with the impression the soybean market is struggling to stay alive? Can the Brazilian crop get low enough to support the US market? As of this writing I don’t think so. What’s out there to buoy the soybean meal market? As of this writing I can’t find anything. Soybean does real well in keeping the soybean market alive but that’s the best it does. Don’t forget about last Friday’s reversal in bean oil. All we are doing is testing that reversal as we speak.       

Daily Support & Resistance for 02/06

Mch Soybeans: $9.12 – $9.29

Mch Soybean Meal: $308.0 (?) – 312.5

Mch Soybean Oil: $29.80 – $30.60

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