Soybean Commentary
August Soybeans 10 ½ cents higher ($9.59 ¾), Sept 11 ¾ cents higher ($9.64) and Nov 13 cents higher ($9.69 ¾)
August Meal closes $4.5 higher ($308.0), Sept $4.6 higher ($309.9) and Dec $4.8 higher ($314.2)
August Bean Oil closes 9 pts lower ($33.51), Sept 11 pts lower ($33.58) and Dec 10 pts lower ($33.93)
USDA announces 206 K T. old crop soybeans sold to unknown
Weekly Soybean Crop Rating & Progress – 60% GE (+1%) vs. 59% expected vs. 72% year ago – Blooming – 90% vs. 88% 5-year average – Podding – 65% vs. 62% 5-year average
Short covering ahead of the USDA production report on Thursday, August 10th as well fears over Iowa dryness (parts of west central Illinois also) had soybean and soybean meal prices trading higher on Monday. Soybean oil was the recipient of inter-market spreading against the higher bean and meal prices. Unlike corn I’m not expecting much of a change in the soybean yield as soybeans are made during the month of August. Average yield trade guesstimates are ranging from 47.5 bpa (Reuters) to 47.4 bpa (Bloomberg). These yield estimates would suggest a drop in production of about 50 million bu. As I mentioned there are some areas of concern due to dryness but it should be noted that the short term forecasts (this week) are not totally dry.
The underlying trend in the interior soybean basis is higher as the recent break in the flat price has shut down any old crop origination. River locations are showing the best improvements. Similar to nearby corn spreads the nearby soybean spreads remain soft looking while the forward spreads, Nov forward, are trying to suggest something might be in the works. The interior meal basis still stinks despite some crusher downtime this month. Meal spreads continue to show a southerly bias.
From a technical standpoint the rally today in the bean and meal markets were in response to a short term oversold condition. Weather considerations will work both sides of the fence during the month of August as forecasts/rainfall will be closely monitored. Bottom line – the soybean complex is not yet out of its weather market.
Daily Support & Resistance for 08/08
Nov Beans: $9.60 – $9.83
Dec Meal; $310.5 – $318.0
Dec Bn Oil: $33.75 – $34.45
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.