Soybean Commentary
March Soybeans close 9 cents higher ($10.36), July 9 ¼ cents higher ($10.55) and Nov 7 ¼ cents higher ($10.17)
March Meal closes $1.2 higher ($332.8), July $1.1 higher ($339.2) and Dec $0.1 higher ($328.1)
March Bean Oil closes 58 pts higher ($34.44), July 57 pts higher ($34.99) and Dec 52 pts higher ($35.08)
Weekly Soybean Export Inspections – 1.635 M T. vs. 900 K – 1.200 M T. expected
On Sunday night the soybean market opened steady and then proceeded to rally. This had all of the ear markings of Chinese interest. Why they were buying is pretty much a mystery to me as I know they had been focusing on Brazilian origin of late (was this pricing that needed to be done prior to shipping?). Granted export inspections were great but this is pretty much old news meaning inspections are not indicative of new business. Initially the meal market rallied with the soybeans but as the day went on meal sells off and bean oil rallies. Bean oil rallies on the coattails of better palm prices. The weather in SA remains conducive to a great crop out of Brazil and a solid crop out of Argentina (some will say areas of Argentina got too much rain over the weekend but I’m taking that with a grain of salt. The bottom line is that the entire soybean complex remains in an interim downside corrective phase.
The interior soybean is showing a better bias vs. one week ago. The Ohio River is 10 cents higher, Burns Harbor is 7 cents better, Decatur IL is unchanged, Decatur IN is 2 cents weaker, Lincoln NE is 2 cents better, Toledo OH is unchanged, Seneca IL (river) is 7 cents better, Savannah IL is 3 cents better and Davenport IA is unchanged. The Gulf is running 1-3 cents better. Despite what appears to be a higher bias for the cash soybean spreads within the current crop year are staying wide. In recent weeks we have seen some decent export meal business. Despite this offers to sell cash meal remain depressed and the spreads stay relatively wide. The spread action continues to suggest we have the product to meet the demand.
The average trade guesses for the upcoming USDA supply-demand report suggest the US soybean carryout will decline by 10 million bu. and the World carryout will decline by 2.4 M T. the decline in the World carryout is due to reductions in the Argentine crop. CONAB will update the Brazilian crop on next Thursday. Most in the trade believe their most recent estimate of 103.8 M T. could be closer to 106.0 M T. This would mostly offset the decline in the Argentine estimate. The bottom line is that as of this writing there appears to be enough soybeans and soybean products to go around. With that said selling rallies appears to be the best approach to the complex right now.
Daily Support & Resistance for 02/07
March Beans: $10.25 – $10.48
March Meal; $330.0 ($326.0) – $338.0
March Bn Oil: $33.75 – $34.80
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