Soybean Commentary
July Soybeans 13 ¾ cents lower ($9.12 ¾), Aug 13 ½ cents lower ($9.16) and Nov 9 ½ cents lower ($9.19 ¾)
July Meal closes $4.2 lower ($297.6), Aug $4.0 lower ($298.9) and Dec $3.0 lower ($303.4)
July Bean Oil closes 18 pts lower ($31.42), Aug 17 pts lower ($31.54) and Dec 16 pts lower ($31.95)
Weekly Soybean Export Inspections – 335.5 K T. vs. 250-450 K T. expected
USDA announces 134 K T. old crop soybeans sold to unknown
Soybean Crop Progress – 67% planted vs. 68% expected vs. 68% 5-year average – 37% emerged vs. 40% 5-year average
The soybeans complex continues to take it on the chin as there is more and more talk around possible Chinese cancellations of old crop business. Crush margins in China are such that it makes it appear China is drowning in soybeans. This makes me wonder who the “unknown” buyer is given the once a week sales’ announcements from the USDA involving old crop soybeans. Soybean meal was the downside leader among the products. Despite the sloppy looking product markets Board crush margins continue to stand in. There is still a lot of talk about how many corn acres may switch to soybeans but no one as of this writing has a decent handle on this.
Changes in the interior soybean basis are similar to that of corn – river locations are mostly easier while elevators and processors are running unchanged. The Gulf eases a bit but remains in its recent range. Spreads ran softer within the old crop. Old crop loses noticeably to the new crop. July/Nov trades down into new contract lows. The interior meal basis remains nothing to write home about; it continues to be rather ugly. With that said meal spreads continue to ratchet lower.
So – How low can you go? Daily momentum indicators for the entire soy complex are starting to read rather low yet the 14-day RSI is nowhere near oversold. If one looks at April 11th to the May 10th rally in July beans it measures to $8.93 ½. That same rally in November beans measures to $9.03 (the August 2nd low was $9.03 ½). I’m not sure we are going to get that low in either markets but we may come close. We’re getting to the point that if we are going to get that low we may have to see a bit of a bounce first. I have to ask the question – who are we liquidating here other than the producer? As of this writing I’m thinking the short term risk is to the upside not the downside given some of the technical indicators are starting to read rather low.
Daily Support & Resistance for 05/31
July Beans: $9.02 – $9.16 ($9.22)
July Meal; $295.0 (?) – $301.0
July Bn Oil: $31.00 – $31.75
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