Soybean Weekly Comments

Soybean Weekly Comments

To start the week soybeans gapped higher at the start of the overnight session but turned lower late in the overnight session and then added to the losses in the day session to close solidly lower. Broad economic worries after the Silicon Valley Bank collapse pressured the market. Harvest pressure came from Brazil as the crop is now 53% harvested and looks to be a record crop. Last week’s export shipments were in the range of trade expectations. Losses were limited by lower production estimates for Argentina as BAGE cut their estimate by 4.5 MMT to 29.0 MMT (USDA lowered their estimate to 33 MMT last week which would be the smallest crop since 2009).

Soybeans ended Tuesday’s session mixed with small gains in the front months and small losses in the new crop contracts. Support came from yet another estimate cutting Argentina’s production as Dr Cordonnier lowered his estimate by 3 MMT to 28 MMT vs. USDA’s 33.0 MMT but left Brazil unchanged at 151.0 MMT vs. USDA’s 153.0 MMT. But the lower production in Argentina will be offset by Brazil’s record crop. The Feb. NOPA crush report will be released tomorrow and the average trade estimate for Feb. crush is 166.1 MB vs. last Feb’s 165.1 MB and soybean oil stocks are expected to slightly increase.

In Wednesday’s session soybeans saw small gains overnight but turned lower in the day session and closed lower, with the new crop contracts seeing bigger losses. The Feb. NOPA report was mixed as crush came in at 165.4 MB, slightly lower than the average trade estimate of 166.1 MB but soybean oil stocks were lower than expected at 1.809 billion pounds vs. trade estimates of 1.886 billion pounds. Brazil raised their estimate of February export shipments from 14.662 MMT to 14.893 MMT, which set a record for the month of February. Losses were limited by the ongoing drought in Argentina as we are now seeing multiple estimates below 30 MMT (USDA is at 33 MMT). A private analyst put Brazil’s production at 149 MMT vs. USDA’s 153 MMT.

Soybeans were higher overnight, turned lower at the start of Thursday’s day session, but were able to bounce back and close on either side of unchanged. Last week’s export sales were at the top of the range of trade expectations and the highest in 7 weeks. Spillover support came from the sharply higher soybean oil market. Support also came from reports that Brazil’s port of Paranagua is falling behind loading cargoes as poor road conditions are slowing truck traffic to the port. Allendale’s acreage survey estimates planted soybean acres at 87.8 million vs. USDA’s estimate of 87.5 million and last year’s 87.45 million acres. With Brazil having a record soybean crop, domestic crush is expected to increase and that will in part make up for the lower crush in Argentina. Argentina’s crush association said they are operating at the lowest capacity in history due to the drought.

May soybean support is at $14.75 while resistance is at $15.45. Nov support is at $13.65 while resistance is at $14.05.

For the week, May soybeans were at $14.765 down 30.5 cents and Nov. soybeans were at $13.135 down 44.0 cents. May soybean meal was at $466.00 down $19.90. May soybean oil was at $57.46 up 85 cents.