Soybean Weekly Comments July 5

Soybean Weekly Comments July 5

To start the week soybeans saw gains in the first half of the overnight session but gave away those gains by the end of the overnight. The market then climbed higher throughout the day session and closed with solid gains. Spillover support came from the sharply higher soybean oil market which saw gains around $2.00 today. Oil was higher on rumors that Indonesia might impose tariffs on Chinese goods and that would lead China to seek other sources for vegetable oils. USDA reported May crush at 192.0 MB. That was below the average trade estimate of 193.9 MB but did set a new record for the month of May, beating last May’s 189.3 MB. Soybean oil stocks came in slightly lower than expected at 2.187 billion pounds vs. the average trade estimate of 2.214 billion pounds. Last week’s soybean export shipments were in the range of trade expectations. China is on track to import a record amount of soybeans for the month of July with the majority of those beans coming from Brazil.

On Tuesday soybeans climbed higher during the overnight session but gave back most of the gains in the day session, closing just a few cents higher. Soybean crop conditions are the best in 4 years for early July and slightly better than the 10-year average. Support came from another sharply higher performance by the soybean oil market. The USDA ag attaché in Brazil estimates the soybean crop at 150.0 MMT vs. USDA’s current estimate of 153.0 MMT. Dr. Cordonnier cut his estimate of US harvested acres by 750,000 to 82.5 million. Using a yield of 52.0 bu/acre, which would bring production to 4.39 BB.

In Wednesday’s session soybeans were lower at the start of the overnight session, but soon got back on the positive side and were able to hold those gains for the rest of the session to close with decent gains. USDA reported a sale of 110,000 MT of soybeans to unknown, split 50/50 between old and new crop. The market continued to see spillover support from the sharply higher soybean oil market. The August contract has gained $4.57 over the last 3 sessions. Soybean oil’s rally is due to a brewing trade war between Indonesia and China that may cause China to find new sources of vegetable oils. Gains were limited from rumors that China just bought 15 to 20 cargoes of Brazilian soybeans. COFCO is expanding their grain export capacity at Brazil’s Santos port from 4.5 MMT to 14.0 MMT annually. The majority of that grain will go to China.

For the week, Aug soybeans were at $11.6625 up 32.75 cents and Nov. soybeans were at $11.2975 up 25.75 cents. Aug soybean meal was at $357.20 up $11.20 and Aug soybean oil was at $49.55 up $5.48.