Soybean Commentary
May Soybeans close 3 ½ cents lower ($9.61 ¾), July 3 ¾ cents lower ($9.70 ¼) and Nov ¾ cent lower ($9.66 ¾)
May Meal closes $0.4 lower ($313.8), July $0.8 lower ($317.7) and Dec $0.4 higher ($319.0)
May Bean Oil closes 58 pts lower ($32.07), July 61 pts lower ($32.28) and Dec 54 pts lower ($32.75)
Weekly Export Sales – Soybeans – old crop vs. 300-500 K T. expected; new crop vs. 0-200 K T. expected – Soybean Meal – old crop vs. 40-175 K T. expected; new crop vs. 0-40 K T. expected – Soybean Oil – old crop vs. 0-20 K T. expected; new crop vs. 0-15 K T. expected
Highlights of USDA Soybean Supply-Demand Report – US Old Crop – lowered carryout by 10 million bu. (combination of reduced crush vs. increased exports) – US New Crop – carryout comes in 83 million bu. less than expected – World Old Crop – Increased carryout 2.61 M T. – World New Crop – carryout comes in 2.22 M T. higher than expected but down 1.3 M T. vs. the old crop.
Overall the soybean data was pretty much a non-event. We did see a knee-jerk to the upside once the trade saw the US new crop projected ending stocks as they were 83 million bu. less than expected. Reality set in shortly thereafter when it was realized there is nothing too friendly about a 480 million bu. carryout. The rationale behind the lower than expected US new crop carryout is better demand. One example; China imports were set at 93 M T. vs. 89.0 M T. this year. Given the data we received today it is my thought we are going to see a shift in inter-market spreading – it had been long oilseeds/short feed grains.
It appears processors are reaching for cash soybeans given the improving board crush margins (despite being down today). River locations continue to stand in as Gulf values continue to inch higher. Spreads were soft today as spec selling weighed on the old crop while the unknown (planting/growing conditions) around the new crop lent support. For what it is worth the cash meal market remains in doldrums and the respective futures’ spreads reflect it.
The soybean picture remains the same as it has for the past number of days – an upflag. Today’s trade posted new highs for the flagging formation but stayed within the defined up channel. One would think the lower close after the new short term highs will attract some new selling. I’m not sure how much more flakey the trade in meal can get – the other day we saw a suggested interim sell signal that had no follow through – today we saw new 6 week highs followed by a lower close. I’ve said it before and I’ll say it again – I’m lost as to what keeps the soybean market alive.
Daily Support & Resistance for 05/11
July Beans: $9.60 – $9.80
July Meal; $314.0 – $321.0
July Bn Oil: $31.90 – $32.90
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.