November Soybeans closed 6 ¾ cents lower ($9.15), March 6 ½ cents lower ($9.40 ¾) & July 6 cents lower ($9.63 ¼)
December Soybean Meal closed $3.8 lower ($298.9), March $3.7 lower ($301.3) & July $3.5 lower ($312.9)
December Soybean Oil closed 18 pts higher ($31.75), March 17 pts higher ($32.22) & July 15 pts higher ($32.81)
Weekly Soybean Export Sales – old crop vs. 600 K – 1.200 M T. expected – new crop vs. none expected
Weekly Soybean Meal Export Sales – old crop vs. 150-300 K t. expected – new crop vs. none expected
Weekly Soybean Oil Export Sales – old crop vs. 5-25 K T. expected – new crop vs. none expected
Soybean and soybean meal move lower from the idea that a China/US is moving further away vs. getting closer. The thought is now that any China/US trade deal (Phase One) won’t be signed until December. Where this deal will be signed remains anyone’s guess. The other day the US was favoring Iowa, Alaska or Hawaii. Now I’m hearing Switzerland and Sweden are being considered. Comments from the US still say we are going to have a deal and they re-iterate China wants one as well. China says they want existing tariffs removed and no more in the future. This doesn’t sound all that positive to me. In the meantime we’ve only seen a handful of small parcels (1-2 cargoes) of Chinese business spread out over the past few weeks. Brazil it seems is finally receiving the rains that have been in the forecasts for the past couple of weeks. Soybean oil continues to go it alone on the upside getting strength from both palm oil and the underlying bio-diesel demand.
The interior soybean basis continues to show a strong bias but is does appear the recent rate of increases is beginning to slow in many areas. Cash soybean movement remains less than desired which is the primary boost to basis levels. The Gulf remains firm on this slow movement. Despite the strong basis levels and a prominent exporter owning the entire soybean deliveries, 1764 of the 1769 registered, spreads within the current year don’t do a whole lot. The recent attempt of the year-to-year spreads trying to rally appears to be failing.
I think it is very telling that as of tonight’s close soybeans are now noticeably trading below the levels we traded at after the October 10th production report that was deemed quite bullish. Why is this – because the meal market is a mess. Some will ask what about bean oil’s influence on soybeans – history tells us a rally in bean oil can keep soybeans alive but rarely support a major rally. Look at this way – soybeans are a 60 lb. bu. When processed we get 11 or so pounds of bean oil and 46 pounds or so of soybean meal. It’s tough for an 11 pound child to rally its 60 pound parent. Because the average trade guesses for the upcoming USDA report is looking for yet lower production and carryout data I would be greatly surprised to see prices continue to be on the defensive going into this report; China deal or no China deal.
Daily Support & Resistance for 11/07
Jan Soybeans: $9.22 – $9.35
Dec Soybean Meal: $296.5 – $302.5
Dec Soybean Oil: $31.30 – $32.06 (?)
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