Soybean Weekly Comments

Soybean Weekly Comments

To start the week soybeans saw small losses overnight but turned sharply higher at the start of the day session only to pull back and trim the gains as the day session continued. Last week’s export shipments were below the range of trade expectations and a 23-week low. Brazil’s harvest is estimated at 40% complete, in line with the 5-year average. Light support came from South American weather conditions as Brazil is seeing rain in the areas currently be harvested and Argentina continues to see hot and dry conditions. But gains were limited by China shifting their focus to Brazil for their needs and Brazil seeing a record crop. Dr Cordonnier lowered his production estimate for Argentina by 1 MMT to 31 MMT and left Brazil’s production unchanged at 151 MMT.

On Tuesday soybeans were the lone market that opened the session lower and then firmed to go into suspension steady. Like the other grains, soybeans traded in a tight 4 cent trading range overnight. Profit taking and technical selling started the soybean market on the defense as it appeared that today was a turnaround Tuesday type session. Light selling was also tied to improving weather conditions for northern Brazil, which is expected to see a break in the rain. Losses were kept in check from production estimates for Argentina that are calling for the crop to be below 30 MMT. Late session pressure came from a collapse in the financial sector due to expectations that the Fed will increase interest rates 0.5% next week.

In Wednesday’s session soybeans saw small losses overnight, turned higher at the start of the day session and then added to the gains when the report came out. But the market could not hold those gains and trimmed gains for the rest of the session. The report was friendly soybeans for both US and world numbers. For US numbers, crush was cut 10 MB but exports were increased 25 MB and that put ending stocks at 210 MB, 15 MB less than last month and 11 MB lower than the trade expected.

USDA left Brazil’s production unchanged at 153.0 MMT but made huge cuts to Argentina as USDA cut production 8.0 MMT to 33.0 MMT (which was 3.6 MMT lower than the trade expected). Drought conditions are ongoing in Argentina and its likely production could go below 30 MMT. Those revisions put world ending stocks at 100.0 MMT, 2.0 MMT lower than last month and 0.3 MMT lower than the trade expected.

On Thursday soybeans saw slow and steady gains overnight, then turned sharply lower in the day session but were able to trim the losses at the end of the session. Spillover pressure came from the sharply lower wheat markets and economic worries as Fed Chairman Powell said interest rates hikes will likely be higher than previously expected. Losses were limited by Argentina’s poor crop as yesterday USDA cut production by 8.0 MMT to 33.0 MMT and today Rosario Grains Exchange cut their estimate by 7.5 MMT to 27.0 MMT. Last week’s export sales were disappointing as they were net cancellations and far below the range of trade estimates. But USDA did report a sale of 184,000 MT of soybeans to an unknown destination. Yesterday USDA left their estimate of Brazil’s production unchanged at 153.0 MMT but today CONAB lowered their estimate from 152.9 MMT to 151.4 MMT.

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 $15.07 down 11.75 cents and Nov. soybeans were at $13.575 down 15.5 cents. May soybean meal was at $485.90 up $4.60. May soybean oil was at $56.61 down $4.58.