Soybeans Commentary


Soybeans – Just My Opinion

July Soybeans closed 1 ½ cents higher ($8.48 ½), August 1 ½ cents higher ($8.50 ¼) & Nov ½ cent higher ($8.55 ½)

July Soybean Meal closed $1.9 lower ($282.0), August $1.6 lower ($284.4) & Dec $0.6 lower ($292.8)

July Soybean Oil closed 33 pts higher ($27.60), August 34 pts higher ($27.79) & Dec 31 pts higher ($28.46)

USDA announces “destination change” – 216 K T. of soybean meal sold to unknown now going to Philippines – the USDA announces an additional 138 K T. of soybean meal sold to the Philippines

Soybean oil once again carries the ball keeping the soybean market alive. An improving palm oil market is most responsible. Attitudes involving palm oil are suggesting better export demand while looking at the prospect of declining production. Adding to the veg oil strength is the slow rate of crushing in Argentina due to slow farmer selling. Unfortunately what’s happening in Argentina is not helping the soybean meal market as it once again records new contract lows, new contract low closes. Hanging over the soybean market are the ongoing tensions between the US and China. The latest tensions are stemming from China’s involvement in Hong Kong and the US is threatening possible sanctions. Tensions are such that it is being reported that China has been buying soybeans from Brazil for the upcoming 3rd and 4th quarters. They are paying a premium for these purchases. The rationale is that Chinese buyers want to make sure they are buying from a reliable source not wanting to risk the possible sanctioning down the road. The US administration has said they will speak further on this issue later this week.

The advertised Midwest soybean basis is not seeing much change. Mid-Miss river bids show a firm tone but I have to think that’s more about parts of the Illinois River closing down some time in early June. Not much is happening with the soybean export basis. Soybean spreads saw old crop with fractional improvements vs. the new crop. Recent offers in the cash soybean meal market suggest they are looking for buyers and not finding many. This holds true for the domestic market as well as the export market. Needless to say meal spreads continue to leak wider.

For the time being I’ll be content calling July soybeans a trading range market between $8.30 and $8.60. It remains my thought that July bean oil will have problems as it approaches the $28.00 level. What can one say about July soybean meal – new contract lows and closes pretty much says it all. I’d like to think meal is approaching a modest degree of oversold but the price action is giving no hints to that.

Daily Support & Resistance – 5/28

July Soybeans: $8.38 – $8.55

July Soy Meal: $281.50 (?) – $287.0

July Bean Oil: $26.90 – $28.00

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.