Soybeans Commentary


Soybeans – Just My Opinion

Nov Soybeans closed 33 ¼ cents higher ($11.38 ¼), March 35 ¼ cents higher ($11.44) & July 33 ½ cents higher ($11.36 ¼)

December Soybean Meal closed $10.7 higher ($394.8), March $11.7 higher ($388.5) & July $11.5 higher ($379.0)

December Soybean Oil closed 58 pts higher ($36.06), March 58 pts higher ($35.84) & July 54 pts higher ($35.49)

USDA US Production/Supply-DemandYield – 50.7 bpa vs. 51.9 – Production – 4.170 billion bu. vs. 4.268 – Crush – 2.180 billion bu. vs. 2.180 – Exports – 2.200 billion bu. vs. 2.200 – US Carryout – 190 million bu. vs. 290 – S-T-U – 4.2% vs. 6.4%

USDA World Production/Supply-DemandProduction – 362.64 M T. vs. 368.47 (US off 2.65 M T., Argentina off 2.5 M T.) – World Carryout – 86.52 M T. vs. 88.70 M T.

The trade wanted to see a bullish soybean report and that’s exactly what they got and then some. It has to be noted that the entire drawdown in the carryout came from the reduction in production. All demand numbers (Crush & Export) were left unchanged including the projection that China would take 100.0 M T. of soybeans this year despite the USDA attaché to Beijing suggesting 95.0 M T. Now that we have the production data in place for the next two months SA weather will move to the forefront of daily discussions. The latest forecasts suggest scattered rains around but nothing appears to be too general. Welcome to a weather market for the next few months.

The interior soybean basis markets trade similar to that of corn. Interior river locations flip-flop all around while processor basis levels are pretty steady-eddy. The Gulf midday posting for soybeans continues with its recent easing. The Jan to March to May soybean spreads saw fractional tightening. Beyond those months bull spreading really took off. The interior meal basis has a soft look to it as it seems end-users are balking at the higher prices. The export basis for meal is also losing some of its recent luster. Meal spreads had a slight bearish bias Jan to March to May but after that bull spreading took over.

I see nothing in today’s price action that would suggest prices are too high for soybeans. Sure, short term inter-day and intra-day technical considerations may read a bit high but I’m not seeing that with the daily price charts. The same hold true for the product markets price action. All of the short term overbought considerations can be alleviated with some overnight easiness. My guess at this point is that we can stretch out these gains until we see some beneficial moisture appear for SA. As I said earlier – welcome to this season’s weather market.

Daily Support & Resistance – 11/11

Jan Soybeans: $11.36 – $11.60 (?)

Dec Soy Meal: $390.0 – $402.0 (?)

Dec Soy Oil: $35.60 – $36.40 (?)

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.