May Soybeans closed 16 ¾ cents higher ($15.77), July 14 ¼ cents higher ($15.38 ¼) & Nov 18 ½ cents higher (13.63 ¼)
May Soybean Meal closed $7.3 higher ($423.5), July $6.4 higher ($421.5) & Dec $4.8 higher ($402.4)
May Soybean Oil closed 36 pts lower ($67.95), July 52 pts higher ($63.58) & Dec 119 pts higher ($54.50)
The product markets support/lead the soybean market higher on Tuesday. Soybean meal manages to get a good portion of Monday’s losses back and soybean oil manages to stay firm despite some noticeable intra-market spread realignment. Yesterday’s USDA crush data was considered friendly for soybeans even though the number was pretty much what the trade was expecting. Oil stocks were not as great vs. what the trade was looking for and soybean meal usage continues to be pretty decent despite the more than ample supply. As far as I’m concerned the rate of crush will have to slow over the next couple of months unless the USDA suggests they have understated the supply of soybeans. The pace which we are at suggests available soybean supply will come down to a matter of days by the end of the marketing season. So how do we slow down the pace of crush? It’s called price rationing and as of this moment we’ve yet to achieve that.
The interior basis is like night and day; the processor vs. river locations. The processor at the locations I follow have a 40 cent premium vs. the river locations I track. The gulf soybean basis runs steady to a shade easier. Soybean spreads run a shade easier. The recent price action in the soybean spreads are suggesting it’s time for some backing filling of their recent improvements. The interior meal basis doesn’t do a whole lot nor does the export basis. The last couple of weeks meal spreads have been trying to improve. The rate of crush will remain key to whether or not improvement continues or they roll over. Soybean oil spreads, despite the higher flat price, are showing the type of volatility that would suggest they are entering a corrective phase; especially old crop vs. new crop.
Yesterday I suggested $15.50 plus was an appropriate price level (meaning high enough for now) for July soybeans. So far that is holding true. I think for the soybean market to move higher we need new news that would add to the current level of tightness. Soybean oil which has been an upside leader is showing signs of slowing down in the nearby time slots. The question then becomes can soybean meal pick up the slack and start performing. The last week or so of price action suggests the meal market is downflagging; not bearish price action for longer term considerations.
Daily Support & Resistance – 05/05
July Beans : $15.25 – 15.55
July Meal: $416.0 – $430.0
July Bean Oil: $61.80 – $64.50
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