January Soybeans closed 2 ¼ cents higher ($9.35), March ¾ cent lower ($9.44) & July 1 cent lower ($9.69 ½)
January Soybean Meal closed $1.3 lower ($296.4), March $1.6 lower ($301.3) & July $0.9 lower ($309.9)
January Soybean Oil closed 22 pts higher ($34.46), March 22 pts higher ($34.74) & July 21 pts higher ($35.36)
Flat price soybeans continue to trade inside last Friday’s sharp break. The idea is that China will start buying more soybeans when the phase 1 trade deal is signed later this month. Offsetting some of this idea is the good condition of the SA crop. Some are suggesting the Brazilian state of RGDS may lose 1.0 M T. due to recent dryness but when you’re talking 120 M T. plus crop a loss of 1.0 M T. is not all that concerning. The latest estimates for Friday’s USDA soybean crop update suggest crop size will fall by 38 million bu. while the carryout is expected to fall 51 million bu. I’m not sure what the USDA will do with their demand projections. Will they wait to see what transpires after the Chinese sign the Phase One trade accord? The recent day-to-day trade in soybeans remains subject to the goings on in the product markets. The spread between soybean meal and soybean oil continues to flip-flop back and forth and for the past number of days the day-to-day trade for soybeans gets caught between the two.
The interior soybean basis sees only a couple of changes on the day; Decatur, IN is 2 cents better as is the basis for Seneca, IL. All other interior locations run unchanged. The Gulf appears to be steady over the past couple of days. Soybean spreads (March forward) ran fractionally better out to August and then began easing. In the past I’ve watched the old crop/new crop spread (July/Nov) to give me an idea of the underlying strength and/or weakness. Four days ago this spread traded to a 2 ¾ cent inverse; today it closed at a 4 cent carry. The interior soybean meal basis continues to be slack looking and not much better for export. The March forward meal spreads ran easier on the day.
If March soybeans trade much below $9.35 I have to think it will prompt a run of liquidation. I would be surprised if this would occur prior to the USDA reports on the 10th. The price action in soybean oil acts like a top may be forming but once again I doubt this would be confirmed ahead of the USDA on Friday. Soybean meal continues to linger near recent lows. There have been a number of attempts to rally over the last few weeks but so far have failed to follow through. March meal needs to see conclusive closes over $308.0 to suggest the worst is behind us. Major index fund rebalancing starts tomorrow and it should feature some minor amounts of soybean selling.
Daily Support & Resistance for Jan 8th
March Soybeans: $9.40 – $9.55
March Soybean Meal: $300.0 – $305.0
March Soybean Oil: $34.25 – $35.25
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.