May Soybeans closed 12 cents lower ($8.17 ½), July 12 cents lower ($8.30 ¼) & Nov 11 ¼ cents lower ($8.53)
May Soybean Meal closed $1.8 lower ($291.8), July $1.6 lower ($296.6) & Dec $1.7 lower ($302.8)
May Soybean Oil closed 23 pts lower ($26.84), July 22 pts lower ($27.13) & Dec 23 pts lower ($27.86)
Weekly Soybean Export Inspections – 600.4 K T. vs. 400-600 K T. expected – cumulative to date 32.158 M T. vs. 51.03 M T. projected by August 31st
US Soybean Crop Progress – 6% planted vs. 8% expected vs. 14% 5-year average
The soybean market took the biggest hit from the Sunday WH comments regarding the possibility of additional tariffs against China by week’s end. The US soybean market depends on Chinese demand while corn and wheat not so much. Late in the night session, early in the day session old crop soybeans were down as much as 25 ½ cents and new crop down as much as 24 ½ cents. Soybean meal was down as much as $5.0 plus and soybean oil down as much as 80 pts plus. As the day session went on the complex was able to cut a good portion of the earlier losses due to some bottom picking as well speculative short covering. Part of the rationale for the retracement was “can it get any worse than this?” Of course it can as I’ve learned through the years markets can go lower vs. what we feel reasonable just like they can go higher vs. what we feel reasonable. My thoughts on the additional tariffs – does he really want to do this and risk the farm vote as prices are bad enough already? This coming Friday the USDA will give us their first look at the new crop data. Will they use the March 30th acres given what’s going on with corn planting – what will they use for yield? Does anyone really believe the old crop carryout at 895 million bu. especially if we don’t get a deal with China?
Not much happens with the interior soybean basis vs. last week’s postings. Processors appear to be standing pat as Board crush margins continue to move higher. River locations are stymied due to high water problems. The Gulf basis edges higher in response to the problems getting product to the ports. Soybean spreads ran flat upfront while old crop loses to the new crop.
Is the fate of the soybean complex, the soybean market in particular, really in the hands of the WH? For the time being the soybean market remains extremely oversold and this is with the market rallying 13-14 cents off of the day’s lows. The 14-day RSI for July soybeans stands at 16.8 and for November soybeans 16.0. I believe this has created a scenario that if you want the market to go lower it has to go higher first. The product markets read oversold on momentum data, not RSI data. One additional note on the upcoming USDA report; world carryout projections will be posted twice – one figure with Chinese stocks and one figure without Chinese stocks. Last month Chinese soybean stocks were 22.2 M T. of the total 107.3 M T. World stocks
Daily Support & Resistance for 05/07
July Soybeans: $8.22 – $8.41
July Soybean Meal: $294.0 – 300.0
July Soybean Oil: $26.75 – $27.60
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.