Commentary
Rough week for the soy complexes this week led by meal as it reversed lower. News that China exporting large quantities of soymeal probably didn’t help. Prior to this week, the strength in soymeal prices had been a surprise to some, as the assumption of a strong crush pace would result in burdensome supplies. That wasn’t the case as the low April crush number from NOPA indicated a steep decline in crush rates, mainly due to maintenance downtime which helped tighten stocks. US prices remain elevated and of note managed funds have pushed out to an aggressive long of approximately 100K contracts. However given the action in prices, its likely the current net long is around 80K. Weather for planting soybeans remains non-threatening with drought-stricken areas all but being eliminated with all the Spring rains. New crop soybeans have another issue. China’s current interest in new crop US origin soybeans is zero so far. That is a record low. I don’t think it will remain this way into Fall, but it appears the Chinese crusher is betting on a good crop in the US that could push prices significantly lower this Fall. Soybeans need a US weather issue this Fall to avoid having ending stocks above a burdensome 400 million bushels. No planning delays of anything serious plus more than adequate soil moisture profiles heading into Summer coupled with nonexistent new crop demand lean bearish in my view going forward. Weekly support for July soybeans through next week is at 1192/1190. A close under and its 1178. A close under 1178 and its 1156. Resistance is first at 12.34 and then 12.47. A close over and its 12.72 the 50-week moving average.
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