January Soybeans closed 4 ½ cents lower ($8.92 ½), March 4 ¼ cents lower ($9.07) & July 3 ¾ cents lower ($9.33 ¼)
December Soybean Meal closed $0.7 lower ($298.3), March $0.3 lower ($303.5) & July $0.5 higher ($310.7)
December Soybean Oil closed 44 pts lower ($30.44), March 47 pts lower ($30.88) & July 42 pts lower ($31.54)
Weekly Soybean Export Inspections – 1.942 M T. vs. 1.200-1.800 M T. expected
USDA announced corn sales from last week – 132.0 K T. & 191.0 K T. sold to Unknown should read as soybeans sold to Unknown
Weekly Soybean Crop Progress – Harvested – 94% vs. 95% expected vs. 97% 5-year average
It’s the same story for soybeans and soybean meal but on a different day; grinding south. To date there has been little resolve to the US/China trade talks. Over the weekend China offered this – China said it will raise penalties on violations of intellectual property rights to address one of the major undecided issues in trade talks with the U.S. The country will also look into lowering the thresholds for criminal punishments for those who steal IP, according to guidelines issued by the government on Sunday. It did not provide details. The Chinese invitation to the US trade team to do a face to face this week in Beijing was declined. The US’s response was they requested clearer assurances that China will follow through on the commitments it has made on intellectual- property protection, forced technology transfers and agricultural purchases. For what it is worth I thought the weekly soybean export inspections were pretty solid looking. This was offset by the non-threatening growing conditions in SA.
The majority of the interior soybean basis locations that I track ran steady on the day. The only two changes I saw are Savanna, IL and Davenport, IA both running 2 cents higher. The Gulf for soybeans appears to be fully steady. Soybean spreads ran weaker on the day due to the upfront spec selling. Offers to sell cash soybean meal run unchanged but I’m told with a firm undertone. This is more evident at the Gulf vs. the interior. Meal spreads ran the route of the soybean spreads; softer all the way out to the new crop.
Implied volatility for Jan soybeans based off of the 900 strikes has a “9” in front of it. I understand volatility is a function of uncertainty and right now the market is telling us we have none. I have to ask the question; “Can implied volatility go that much lower?” With the low volatility and the modest degree of oversold I have to question how much more is the downside for the soybean market. As of this writing it is my thought that the current break in Jan soybeans will find support somewhere between $8.90 and $8.85. If you don’t like bottom picking futures maybe a thought about buying volatility.
Daily Support & Resistance for 11/26
Jan Soybeans: $8.87 – $9.04
Jan Soybean Meal: $297.5 – $304.0
Jan Soybean Oil: $30.20 – $31.00
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.