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Soybeans Close 17¢ Higher Tuesday

Corn, wheat are higher too.

DES MOINES, Iowa — On Tuesday, the CME Group’s soybean market closed up 17¢, adding to gains for the second day in a row. Speculators and, to a lesser extent, weather concerns in the U.S. and Argentina are supporting the market, analysts say.

At the close, the July corn futures settled 5½¢ higher at $3.87, Dec. futures finished 6¾¢ higher at $3.94½ per bushel.

Market Related News: Brazil Doles Out Tariff-Free Corn Import Allowances.

July soybean futures closed 17½¢ higher at $10.27¼, while Nov. soybean futures settled cents higher at $10.09.

July wheat futures ended 10¢ higher at $4.87¾. 

July soy meal futures finished $7.10 short ton higher at $326.60. July soy oil futures closed $0.01 higher at $34.21. 

In the outside markets, the Brent crude oil market is $1.42 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 5 points lower.

Jason Ward, director of grains and energy, Northstar Commodity, says speculative buying is pushing this market higher.

“I view U.S. weather as bearish to beans; slower corn plant raises potential for switch to soybeans. Plus, Argentina looks drier for the next 10 days according to our weather guys, so that, too, looks more negative. So to explain the upside in soybeans, it has to be spec buying,” Ward says.

The speculators have this market in an uptrend, and they can keep it going a lot higher than any fundamental suggests it should trade, he says. “I tell my customers the best way to capitalize on a market like this is to sell into it at production numbers that make sense for your operation. A lot of producer-selling happened at $9.85. We did a little before that. Our worst sale right now is $9.70. We did more at $9.86, and our next upside target is $10.45, which is last year’s high,” Ward says.
 
The trade really wants to see the Nov ’16 soybean futures contract close any given trading day above $10.00 per bushel, Ward says. “We have yet to do that this year.”

Ward adds, “I honestly feel like we are going to get more soybean acres out of the U.S. as a result of this rally, with the Delta states switching some and Dakota state farmers. Even possibly eastern Corn Belt acreage switches could occur.”
 
The trade is also interested to see if yields in Argentina are hurt as much as the market has built in. “We are building in yield losses of 5% to 7%. Once we get dry enough to harvest some good data from there, it will be helpful in determining price,” Ward says.
 
“I still go home every night very thankful for this rally. It has brought soybeans from a huge loss for my producers to a small loss to in some cases a breakeven. If we trade $10.45 or higher, it will be profitable for many, many producers, so I’m still cheering for it to rally more,” says the Minnesota-based grain analyst.

CORN THE FOLLOWER
It should be interesting to see if the soybean rally can pull up the corn market, Ward says. “Last week, between $4.00 and $4.09 December corn, 0 bushels were sold. And that was not because it happened too fast and went down quickly, but because it simply isn’t high enough to break even. I am having a hard time advising sales of corn in April below breakeven,” Ward says.

BELOW COST OF PRODUCTION
Ward points out that anyone who advised selling November 16 soybeans below $9.60 was selling soybeans at a loss, and at a good yield, it is still a loss.

“My numbers range from $4.50 to $5.50 an acre to put soybeans in the ground. So, let’s just say $500 per acre covers many producers. Figuring $10 cash at 50 bushels, that would be a break-even level. I think guys are comfortable using 55 bushels. So, this area on price can at least protect breakeven or slight profit,” Ward says.

Corn is still a loss for even some low-cost producers, he says.

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