Morning Soybeans: November Contract Highs in 11 of the Past 12 Sessions
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In the USDA update, Brazilian 2021/22 production came in at 134 million tonnes versus an average expectation 133.50 million (range 126.50 to 137.50 million) and 139.00 million in January. However, Conab this morning pegged the harvest at 125.4 million tonnes which was down from their previous estimate of 140.5 million tonnes. Until there is a better weather forecast besides very dry weather for Argentina and southern Brazil, fund traders are likely to remain active buyers. March soybeans have hit new contract highs for 8 of the last 11 trading sessions. The USDA data was mostly neutral but the weather forecast is bullish, and this was enough to spark more buying interest. Poor weather since February 1, plus another two weeks of dry weather in the forecast for Argentina may be enough to spark a significant drop in production for the March update. On top of the USDA data, exporters announced the sale of 240,000 tonnes of US soybeans sold to China. March meal also closed sharply higher on the session and has pushed to new contract highs for five of the last seven trading sessions. If Argentina production drops off, meal exports are likely to drop and this could shift demand to the US.
Brazil soybean exports were revised lower by 3.5 million tonnes. US 2021/22 soybean ending stocks came in at 325 million bushels versus an average trade expectation of 316 million and a range of estimates from 182 to 375 million. This was down from 350 million in the January report. Crush was revised higher by 25 million bushels to a record high 2.215 billion bushels. Exports were unchanged but if there is significant damage done for the South America crops, US exports are likely to increase. World ending stocks came in at 92.83 million tonnes versus an average expectation of 91.40 million (range 86.00 to 99.00 million) and 95.20 million in January. Argentine production came in at 45.0 million tonnes versus an average expectation of 44.30 million (range 42.50 to 46.00 million) and 46.50 million in January. China's import demand was revised down by 3 million tonnes, which is a negative development.
MARKET IDEAS
The report news was mostly neutral and with the bullish weather forecast, buyers could remain active. Further damage to the Argentina crop looks possible over the near term. March soybean support is at 1595 and 1570 1/2, with 1628 and then 1655 as next resistance. November soybeans have posted contract highs in 11 of the last 12 trading sessions which leaves the market extremely overbought.