Soybeans Commentary


Soybeans – Just My Opinion

September Soybeans closed 14 ¼ cents higher ($8.59 ¼), Nov 14 ¼ cents higher ($8.72) & Jan 13 ¾ cents higher ($8.85 ¾)

September Soybean Meal closed $4.4 higher ($292.9), Oct $3.9 higher ($294.3) & Dec $4.1 higher ($298.1)

September Soybean Oil closed 12 pts higher ($28.38), Oct 9 pts higher ($28.35) & Dec 8 pts higher ($28.53)

USDA announces 138.0 K T. of soybeans sold to Mexico

USDA announces 195.75 K T. of soybean meal sold to Mexico (155.0 K T. for 2019-20 & 40.75 K T. for 202-21)

The South China Morning Post, citing a source, writes “China ready to sweeten deal by buying American goods” – “China is expected to agree to buy more American agricultural products in hopes of a better trade deal with US”. This article coupled with the late maturity of the US soybean crop and the ongoing dryness in Mato Grosso, Brazil (Planting should be starting shortly with no relief being forecasted for the near term) prompted a 1, 2, 3 cover your shorts from the spec sector.  As we look ahead to the USDA crop report on Thursday the expectation is for a drawdown in the old crop carryout due to exports exceeding earlier export projections. I’m not sure the USDA can say anything too revealing about the new crop given the lateness of the crop. I don’t think the USDA will stick their necks out and say the crop won’t make it to maturity.

The interior soybean basis continues to be on the defensive as is the Gulf basis. Export needs are not that great and what harvesting that is happening in the Delta is taking care of that demand. Soybean spreads had a slight bullish bias given the spec short covering. Offers to sell cash soybean meal are pretty much maintaining status quo as demand is nothing too exciting. Meal spreads has a very slight bullish bias December forward.

Can we call the rally from Monday’s low to today’s high the short covering/position squaring that was to be expected ahead of the USDA report on Thursday? If so I doubt we see much more upside follow through until we see what the USDA has to say. This scenario should hold true for the meal market as well. Soybean oil should maintain its $28.00 to $29.00 trading range ahead of Thursday.

Daily Support & Resistance for 09/11

Nov Soybeans: $8.64 – $8.80

Dec Soybean Meal: $294.0 – $301.0

Dec Soybean Oil: $28.20 – $28.90

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.