Soybean prices surge
Closing Soybeans Commentary
Fundamental Support: A great week was seen with the May contract picking up 44 cents. Delays in the fledgling Brazilian harvest, and problems with Argentine export approvals, were the prime movers. Also this morning we learned that China purchased two cargoes of old crop soybeans from the US. Having noted this good news we must balance it out with some other facts.
South American Production: Yesterday we released our estimates for next Thursday’s crop report. In our discussion yesterday we indicated a rise in US ending stocks. Another issue to note is the world side of the balance sheet, specifically South America.
Everyone agrees that USDA is too low on its Brazil estimate. Conditions have been great in the past two months. That will be a little bearish. Previously, Argentina appeared to be a minor issue. The Buenos Aires Grains Exchange, Oil World, and Allendale looked for either no change or a slight decline in production. The trade was surprised to see one US firm this morning suggest Argentina could actually be increased by 2.5 million tonnes. This one stuck out to the trade.
Update on China: As of last week China had purchased 24.6 million tonnes (905.5 million bushels) of old crop soybeans so far. Of this total, 3.9 million tonnes (142 million bushels) have yet to be shipped out. Though we heard more talk that China may cancel some of these bookings, we see no reason to expect any wholesale liquidation.
Direction: Short-term news and momentum is bullish. We still suggest soybeans will be pulled up by corn. However, once the South American problems are cleared up, corn is going to be pulling up a heavy load.
(03/04) Bought May beans 1402, risk 1384, objective 1441 1/2. Closed 1414.
Closing Cattle Commentary
Live Cattle: Last night’s discussion of long term supplies, exports, and prices brought quite a bit of interest from clients. This morning, we were pleased to see information affecting the largest portion of demand, the US consumer. Though it could be argued the economy, and employment is not growing sharply, no one can say it is not improving.