SOYBEANS: Enough Production Uncertainties for Argentina to Support
NEAR-TERM MARKET FUNDAMENTALS
For Argentina growing areas, a front moved through on Thursday producing widespread showers for northern areas of the country, but only light showers for the main growing areas. After today, it will be at least a week of dryness. Temperatures will be cooler but the lack of moisture continues to be a major concern for corn and soybeans. May soybeans closed higher on the session yesterday after choppy and two-sided trade. Outside market forces recovered from early weakness and traders remain uncertain as to the size of the Argentina crop. Talk of potential further losses in production due to the heat wave this past week and a new forecast which shows a sharp drop in temperatures and concerns for localized frost in southern growing regions helped to support. The strong gains in soybean oil for the second day in a row added to the positive tone as soybean oil stocks came in near the low end of trade expectations in the crush report on Wednesday. May soybean meal traded down to the lowest level since February 9 before the higher close. Exporters announced the sale of 128,000 tonnes of US soybeans to unknown destination.
The US Drought Monitor this week showed improvement in some of the drought areas over the past week. Most of Missouri had a full category improvement, leaving a relatively small moderately dry area. Abnormally dry readings were removed from southern Illinois and were reduced in some of the western and northern parts of the state. Iowa saw some slight improvement. These areas could show further improvement in next week's maps given the widespread precipitation hitting those areas this week. US soybean export sales for the week ending February 9 came at 512,802 tonnes for 2022/23 and 259,089 for 2023/24 for a total of 771,891 as compared with trade expectations for 400,000 to 1.1 million tonnes. This was up from 558,892 tonnes the previous week but below the four-week average at 866,365. Cumulative sales for 2022/23 have reached 48.090 million tonnes, slightly below 48.077 million last year but above the five-year average at 44.496 million. Sales have reached 89% of the USDA forecast for the marketing year versus a five-year average of 81%.
The largest buyer this week was China at 472,645 tonnes, followed by Mexico at 198,135. Unknown canceled 509,000 for 2022/23 and bought 66,000 for 2023/24 for a net cancellation of 443,000. Pakistan cancelled 121,000. China has the most commitments for 2022/23 at 29.826 million tonnes, followed by Mexico at 3.923 million and Unknown at 3.150 million. EU nations have purchased 3.333 million so far for 2022/23. Soybean meal sales came in at 270,853 tonnes for the 2022/23 (current) marketing year and 25,000 for 2023/24 for a total of 295,853 as compared with trade expectations for 100,000-300,000 tonnes. This was up from 182,623 the previous week and above the four-week average of 245,505. The largest buyer this week was Ireland at 62,000 tonnes, followed by Philippines at 56,232 and Vietnam at 50,000. Philippines has the most commitments for 2022/23 at 1.164 million tonnes, followed by Mexico at 976,000.
TODAY'S MARKET IDEAS
May soybeans remain in a consolidation just under the three highs from December, January, and February 13 right near 1545. Close in support is at 1511 1/2 and 1503 1/4, with 1554 3/4 and 1572 3/4 as next swing targets if the triple highs are taken out. May meal is in the process of correcting the overbought condition with support at 475.30 and 470.60. A resumption of the uptrend would leave 494.90 as next upside target. May soybean oil resistance is at 62.43 and 63.32.