Soybeans Commentary


Soybeans – Just My Opinion

July Soybeans closed 23 ½ cents lower ($15.60 ¼), August 15 ¼ cents lower ($15.22 ¼) & Nov 4 ½ cents higher ($14.40)

July Soybean Meal closed $9.3 lower ($386.9), August $8.1 lower ($389.2) & Dec $2.7 lower ($391.5)

July Soybean Oil closed 51 pts lower ($70.83), August 20 pts higher ($68.17) & Dec 109 pts higher ($65.39)

Weekly Soybean Export Inspections – 237.1 K T. vs. 100-300 K T. expected

Most Ag markets, the soybean complex included, were sharply higher Sunday night only to fade during the Monday day session. Old crop within the complex suffered the hardest breaks. July soybean went from 40 cents higher to 25 cents lower. July soybean oil went from 240 pts higher to 80 pts lower. July soybean meal went from $7.0 high to $10.0 lower. The day session break in the new crop was far less severe. November soybeans went from 36 cents higher to nearly unchanged. December meal went from $8.0 higher to near $4.0 lower. December soybean oil went from 240 pts higher to 0 pts higher. Weather considerations, hot & dry, were behind the initial rally. The day session brought us some hedging on the hot & dry as forecasters reminded us that there will be moisture favoring the eastern Corn belt and the dry areas of the western northwestern reaches may not be totally void of moisture.

The old crop interior soybean basis continues to leak lower. Bids at the gulf are hard to find/quote. The old crop/new crop spreads literally collapse. This type of spread action holds true for the product markets as well. The play going forward will be all about the new crop. It needs to be noted that in addition to the breaks in the old crop basis today was also the first day of the major index fund roll where the passive longs are moved out of the nearby. On Thursday the USDA will update supply-demand. The old crop soybean carryout is expected to come in unchanged to slightly higher. The only changes I see for the new crop will be the old crop carryout / the new crop carryin.

For its first rating of  the season the USDA is suggesting the soybean crop is 67% GE. This compares to 72% GE one year ago. Trade expectations ranged from 64% GE to 75% GE.

It’s all about the weather for the new crop. As long as forecasts favor warm and dry profitaking breaks in the new crop will find support. Given the high volatility any midday wavering in the forecasts will bring us sharp reactions. For the time being the latest forecasts from NWS suggest warm and dry for Illinois west and for normal temps and dry for points east. As long as I see forecasts like this buying sharp breaks to recently established support levels is advocated. Just be careful chasing rallies as the increased volatility opens the door for days like today.

Daily Support & Resistance – 06/08

July Beans: $15.50 – $15.90

Nov Beans: $14.30 – $14.70

July Meal: $382.0 – $398.0

July Soy Oil: $69.00 – $73.00

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.