Soybeans Commentary


Soybeans – Just My Opinion

November Soybeans closed 23 cents higher ($9.06), March 20 cents higher ($9.30) & July 17 ½ cents higher ($9.47)

October Soybean Meal closed $6.0 higher ($295.9), Dec $5.9 higher ($301.0) & March $5.3 higher ($306.2)

October Soybean Oil closed 37 pts higher ($28.99), Dec 24 pts higher ($29.08) & March 23 pts higher ($29.59)

Sept 1st Quarterly Soybean Stocks – 0.913 million bu. vs. 0.982 million expected

2018 Soybean Crop – 4.428 billion bu. vs. 4.528 billion expected vs. 4.544 previous USDA

Weekly Soybean Export Inspections – 982.2 K T. vs. 725 K – 1.100 M T. expected

Weekly Soybean Crop Condition & Progress – 55% GE (+1%) vs. 54% expected vs. 68% year ago – Dropping Leaves – 55% vs. 76% 5-year average – Harvested – 7% vs. 6% expected vs. 20% 5-year average

The soybean market was firm from the “get go” Sunday night on ideas that China bought another 600 K T. of soybeans as part of their ongoing good will gesture that started on Sept 13th. Since this rumored amount happened just today it was not announced on the USDA daily reporting so it will be expected on Tuesday. At midmorning the Quarterly Stocks figure came in noticeably lower than expected which in turn accelerated the rally in the already strong soy complex. Part of this lower than expected number can be tied to the 2018 soybean production figure that came in 116 million bu. less than what the USDA has been telling us for the past year. These lower than expected old crop figures now adds additional importance to what we have maturing in the fields. Recent weather has not been the best given the recent excessive rainfall we saw in parts of the Midwest over the weekend. Soybean meal was the leader in the products’ trade as soybean oil had a tough time sustaining its related rally due to sinking crude oil prices.

Most interior soybean locations saw a steady basis. The only exceptions were Toledo and Seneca, Il; both down 5 cents. I doubt processors will be reaching for any soybeans as crush margins continue to move south to levels not seen since December of 2016. The Gulf basis bumps up by 2 cents or so in response to the recent Chinese buying. so far the harvest in the Delta has been able to handle this recent business. Soybean spreads saw noticeable improvement led by the nearby November as I’m told a good portion of the recent Chinese business if for Oct/Nov shipment. Interior offers to sell cash soybean meal continue with a depressed look while Gulf offers run unchanged but they too don’t appear to be anything special. Meal spreads saw their first improvements vs. the past 4 days. How much of the soy complex spread improvements is tied to month-end and quarter-end short covering remains to be seen.

Now that November soybeans have eclipsed the recent resistance level of $9.05 a new suggested upside target is something closer to the $9.30 level. Dec soybean meal has yet to clear its recent highs of $305.0-$306. If we can clear those highs a run to $315.0 is the next upside possibility. Today’s condition report could be the catalyst for that as I don’t believe recent weather has been all that beneficial for the developing soybean crop. Soybean oil will continue to play second fiddle to the meal market especially if palm oil and crude oil stay depressed.

Daily Support & Resistance for 10/01

Nov Soybeans: $8.95 – $9.20

Dec Soybean Meal: $297.0 – $305.0

Dec Soybean Oil: $28.80 – $29.70

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.