Soybeans Commentary


Soybeans – Just My Opinion

Jan Soybeans closed 33 ½ cents higher ($13.50), March 34 cents higher ($13.47) & July 31 ¾ cents higher ($13.35 ½)

Jan Soybean Meal closed $8.2 higher ($435.4), March $8.1 higher ($431.8) & July $6.0 higher ($425.0)

Jan Soybean Oil closed 143 pts higher ($44.36), March 147 pts higher ($43.60) & July 156 pts higher ($42.47)

Are we looking at the “perfect storm” here? The trade is concerned about a short crop developing out of SA. Argentine producers are threatening to shut down their country’s entire grain movement/trade (they are upset with the latest ban on corn exports). Soybean oil screams higher from continued strength in the palm oil market as well as a surging higher energy market. The trade remains fearful that the US supply will be drawn down to next to nothing. Board crush margins get hit hard which in turn should slow down the rate of crush (a classic example of price rationing). Last but not least expectations for a bullish report form the USDA next Tuesday continue to run high.

If there are any changes with the interior Midwestern soybean basis it’s a touch easier. Like corn I’m not sure we are seeing much in the way of new cash sales as I don’t think the producer has many if any soybeans left and if he has any soybeans left he’s not going to let them go until he’s assured the market is done going higher. Bids for soybeans at the Gulf has been easing for the past couple of days. Upfront spreads ease a bit while the May forward spreads continue to tighten. The interior cash meal market looks a bit easier as it appears the end-user is backing away from the high prices. The meal export market is not showing any signs of weakening. Bull spreads continue to work quite well here.

The only thing I’m sure of is that trading conditions in soybeans are getting extremely slippery as a little bit goes a long way. I have no interest in trying to say what’s high enough at least until I see what the USDA has to say next Tuesday. I do see a smattering of resistance at the $14.00-$14.25 level and then a chunk of congestive type resistance from $14.60 to $15.10. Weekly charts for soybean meal suggest some resistance up towards the $475.0 level. Weekly soybean oil charts show the best looking near term resistance up towards the $48.00 level.

Daily Support & Resistance – 01/06

March Beans : $13.20 – ???

March Meal: $425.0 – ???

March Bean Oil: $43.00 ($42.50) – ???

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.