November Soybeans closed 21 ½ cents higher ($11.99 ½), Jan 23 ½ cents higher ($12.12) & March 23 cents higher ($12.23 ¾)
December Soybean Meal closed $10.7 higher ($342.5), Jan $9.6 higher ($337.9) & March $9.3 higher ($336.3)
December Soybean Oil closed 42 pts higher ($58.47), Jan 44 pts higher ($58.53) & March 43 pts higher ($58.11)
US – USDA lowers yield 0.3 bpa (51.2), lowers production 23 M bu., lowers exports 40 M bu., lowers seed 2 M bu., increases carryout 20 M bu. (340) – STU – 7.80% vs. 7.27% last month vs. 5.68% year ago
World – USDA increased carryin 950 K T., lowered production 1.13 M T., increased usage 760 K T., lowered carryout 790 K T.
Because the trade had gotten so bearish the past week the lower than expected data from the USDA caused a massive knee-jerk reaction. I’ll grant you the trade got caught leaning the wrong way but to trade 52 cents higher on the day after the report was a bit over the top. The report was not that bullish for soybeans. The meal market had already been rallying prior to the report getting its impetus from a strengthening cash market. The bullish reaction to the USDA report just added to the ongoing rally. The USDA report was good enough to pull the soybean oil market out of the hole. The soybean oil market has been recently pressured from the idea of more soybeans for crushing.
The soybean processor still has the best basis levels. Despite the recent stout looking export inspections river basis levels are looking a bit slack. This holds true for the Gulf as well. Soybean spreads, January forward, got a bit of boost today from the short covering. I’m not sure we would have seen any spread improvement without the short covering. The interior meal basis continues to strengthen. The export basis is not slouch. Meal spreads remain firm suggesting the processors have yet to create enough product to meet the demand. Is this their way of preserving margins? Board crush finishes in new high ground.
As I said before I don’t think today’s report was all that bullish for soybeans. Its just that the market got a bit too bearish and that resulted in the knee-jerk reaction to today’s numbers. As of this writing I would be surprised to see Jan beans trade back to the $12.40 level anytime soon. The next resistance level for Dec meal is $348.0-$350.0. After today’s price performance I would expect the rate of decline to start slowing noticeably for Dec bean oil. I think any further downside will come in a grinding type manner.
Daily Support & in Resistance – 11/10
Jan Beans: $12.00 – $12.25
Dec Meal: $338.0 – $347.0
Dec Soy Oil: $57.75 – $59.05
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.