Marketeye: Soybeans shave off 47¢ Wednesday
On Wednesday, the CME Group’s farm markets continue to react negatively to Tuesday’s USDA report.
At the close, the March corn futures finished 21¾¢ lower at $5.34½. May corn futures ended 21½¢ lower at $5.32½. New-crop December corn futures settled 7¾¢ lower at $4.48.
March soybean futures closed 47¾¢ lower at $13.54. May soybean futures finished 46¼¢ lower at $13.52¾. New-crop November futures closed 27¼¢ lower at $11.63¼.
March wheat futures closed 14¢ lower at $6.35½.
March soymeal futures finished $16.40 short term lower at $422.30.
March soy oil futures closed 0.83¢ lower at 45.69¢ per pound.
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In the outside markets, the NYMEX crude oil market is $0.31 per barrel higher (+0.53%) at $58.67. The U.S. dollar is lower, and the Dow Jones Industrials are 81 points higher (+0.26%) at 31,457 points.
On Wednesday, private exporters reported to the USDA cancellation export sales of 132,000 metric tons of corn for delivery to unknown destinations during the 2020/2021 marketing year.
The marketing year for corn began Sept. 1.
Jack Scoville, PRICE Futures Group, says that markets are off, due to fund-selling.
“We are flushing out the weak longs as well. Fundamentally, there was no bullish surprise in the beans data and there were bearish surprises in the corn data yesterday, especially with Chinese corn stocks and demand overall moving forward. Ideas are that this is a correction of an overbought situation, but we might be settling into a trading range for a while,” Scoville says.
Bob Linneman, Kluis Advisors, says that investors will be watching to see if yesterday’s USDA report has a long tail.
“Corn prices are slightly overpriced for a 1.5-billion-bushel carryout, as indicated in the USDA report. That would peg the stocks-to-use ratio at 10.3%, which is still a seven-year low. If China adds any further corn exports this month, then traders will resume the thought that corn prices are not high enough to ration supply,” Linneman stated in a daily note to customers.
Linneman added, “The USDA report on Tuesday had some surprises for corn and soybean traders. Most noticeable: corn ending stocks at 1.5 billion bushels. The trade was expecting something closer to 1.39 billion. Corn exports were only slightly increased compared with trade expectations. Soybean bulls got a friendly report as the USDA pegged the carryout at 120 million bushels. This puts the soybean stocks-to-use ratio at 2.61%, which is below the record set in February 2013. Later in 2013, the carryout fell below 100 million bushels. Many analysts suspect we could see the sub 100-million-bushel level before summer unless we see prices reach high enough levels to ration supply.”
Meanwhile, Terry Roggensack, The Hightower Report, says that the soybean market follows corn lower, with disappointing USDA data.
Roggensack explains that while palm oil futures pushed to their highest level since Mid-January and were up for the fifth session in a row, the higher-than-expected corn supply seems to be sparking selling across the grains and oilseeds today, with May soybeans giving back all their gains from yesterday.
"Beans recovered yesterday, after the initial weakness in the wake of the USDA report and managed to close moderately higher after trading to their highest level since January 19. In the report, U.S. soybean ending stocks for 2020/21 were revised to 120 million bushels from 140 million estimated in January. This was just below the average prereport estimate of 121 million, with expectations ranging from 102 million to 140 million. Ending stocks were as high as 525 million bushels in 2019/20 and 909 million in 2018/19. The only revision was a 20-million-bushel increase in exports, which led to the decline in ending stocks,” Roggensack says.
In his weekly article, Roggensack pointed out that the USDA’s world ending stocks Tuesday were revised lower to 83.36 million tonnes from 84.30 million in January. This was above the average prereport estimate of 83.00 million (range 78.00 to 85.50). World stocks are down from 94.85 million tonnes in 20169/20 and 112.88 million in 2018/19. The sharp drop in the U.S. dollar is seen as supportive, he says. Brazil and Argentina soybean production estimates were left unchanged from the January report, which was contrary to expectations calling for reductions. The Argentine truckers strike has ended after 20 days, Roggensack says.
U.S. soybean oil ending stocks came in at 1.714 billion pounds, down from 1.814 billion in the January report and down from 1.849 billion in 20169/20 and 1.775 billion in 2018/19. Biodiesel disappearance was increased by 100 million pounds.
“While most of the numbers for the report were close to expectations, traders were disappointed with the lack of change in South American production and with how small the revision higher in U.S. exports was. India soymeal exports in January jumped 484% from the previous year to 336,390 tonnes as the meal rally allowed for active selling to Europe and Asia,” Roggensack says.
“The two-week forecast outlook for Argentina shows mostly dry conditions, which may provide underlying support to the soybean prices. Close in resistance for May soybeans comes in at $14.01, with $13.64 as support. Keep $14.84 as an upside target. July Meal resistance comes in at 433.50. A close below 427.70 would sour the chart pattern. If that happened, 419.60 would become the next support area. March Soyoil posted contract highs for the second day in a row. Look for support at 45.39,” Roggensack says.
For daily updates on cattle, hogs, corn, wheat, and the soy complex, visit hightowerreport.com.