Soybeans Commentary


Soybeans – Just My Opinion

November Soybeans closed 2 ¼ cents lower ($9.16), March 2 ¾ cents lower ($9.43 ½) & July 3 cents lower ($9.65 ¼)

December Soybean Meal closed $0.8 lower ($302.2), March $0.8 lower ($308.5) & July $0.8 lower ($316.2)

December Soybean Oil closed 2 pts lower ($30.98), March unchanged ($31.48) & July 2 pts higher ($32.04)

USDA announces 132.0 K T. of soybeans sold to Unknown

Weekly Soybean Export Sales – old crop vs. 500 K – 1.100 M T. expected – new crop vs. none expected

Weekly Soybean Meal Export Sales – old crop vs. 100-250 K T. expected – new crop vs. none expected

Weekly Soybean Oil Export Sales – old crop vs. 0-24 K T. expected – new crop vs. none expected

The soybean and soybean meal markets continue to struggle to get anything going on the upside. Where we are at with the US/China trade deal is anyone’s guess. One of the sticking points is that the US wants China to start buying vast sums of US Ag now and China says it will buy on an “as needed basis”. For a while there we weren’t sure when the two sides would meet to sign off on the proposed Phase 1 deal as Chile cancelled having the APEC summit in mid-November due to civil unrest in their capital of Santiago. Shortly after the cancellation notice came out the US administration said they still plan on the “signing” in the same time frame but not sure where it would happen. The bottom line to the soybean trade is that we’re still waiting to see some additional buying that was alluded to a number of days ago; I believe the number was 10.0 M T. Remember that the managed money players are a relatively new net long in anticipation of better business that has yet to appear.

The interior cash soybean market continues to show an upwards bias due to the lack of movement. River locations are seeing the best basis increases followed by the processor. The Gulf continues to edge higher. Crush margins have stabilized and are trying to move higher. Basis offers for the domestic meal trade are starting to improve due to the lack of soybean movement to the processor. Soybean spreads, Jan forward, ran mostly unchanged to just a fraction weaker. Meal spreads ran steady out to July.

As far as I’m concerned both soybeans and soybean meal are sitting on top of some decent looking technical support. Granted the price action leaves a lot to be desired but the support is there. Jan soybeans have now corrected 30 cents from the high we saw last Tuesday. Given the low volatility in soybeans I would like to think a 30 cent correction is enough for the near term. Soybean meal continues to hover just above the $300.0 psychological support level. Tomorrow is export sales day as well as end of the month and 1st Notice Day for November soybeans. The sales figure will have impact either way they come in. Many have thought China has been buying all along but buying smaller parcels to stay out of the USDA daily reporting system. Month end is always interesting; will the funds take their lumps on their recent longs or try and dress up what longs they have left. November soybean deliveries, or lack thereof, could be telling as to the stance the exporter is currently holding; does he see business right around the corner and hold onto his soybeans or let them go because he is not seeing any market making business anytime soon. Personally I am not a willing seller at current levels.

Daily Support & Resistance for 10/31

Jan Soybeans: $9.28 ($9.25) – $9.40

Dec Soybean Meal: $300.0 – $306.5

Dec Soybean Oil: $30.50 – $31.30

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.