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Soybean prices surge

03/04/2011 @ 3:32pm

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.

Working Trade:

(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.

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03/04/2011 @ 3:48pm Argentina se está secando. las estimaciones de 52 millones son un disparate. Hasta la semana pasada podíamos suponer una cosecha de 48,5 millons de tons, pero los últimos días ha caído. Está afectando fuertemente la zona oeste, en laetapa de llenado de granos abortando chauchas y granos, y reduciendo el peso de las semillas. La cosecha sera de 46 a 48 millones, y la oferta de venta será relativamente muy escasa.

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Mike McGinnis Re: Re: 03/05/2011 @ 11:44am Francisco, Thanks for the comments. For those that can't read Spanish, here is a translation of what Francisco says: Argentina is drying. Estimates of 52 million are nonsense. Until last week, the dryness could lead to a harvest of 48.5 millons of tons, but the last few days has been dropped. The dryness is strongly affecting the west, in grain filling late- aborting beans and grains, and reducing the weight of the seeds. The harvest will be from 46 to 48 million, and offer for sale will be relatively very low.

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