SOYBEANS: Oil Probing for a Short-Term Low; El Nino Watch
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In retrospect, the soybean market was technically sold-out in COT positioning data last week with bullish sentiment from money managers posting 5-month low readings. It should also be noted that the net short positioning in soybean oil reached a 4-week high which in turn signals a market that has already factored significant bearish fundamental information. While the recovery in soybean prices Monday might have been the result of a slight risk on vibe flowing from outside market action, a slow NOPA crush for April highlight bearish demand signals. It should be noted that the most recent crush reading fell from the month prior month. The NOPA crush report came in at 173.232 million bushels, down 6.8% from March and up 2% from last year. While the largest crush for April on record, crush was well short of expectations. Exporters announced the sale of 100,000 tons of US meal sold to Poland. For the weekly crop progress report, traders expected soybean planted area near 51% complete, 46-55 average, as compared with 35% last week. Soybeans planted as of May 14 was up 14% at 49%. This is up 22% versus last year and up 17% versus the 10 year average. The top producing states report Illinois 77% (+11%), Iowa 69% (+20%), Minnesota 30% (+17%), North Dakota 2% (+2%), Missouri 62% (+12%).
Traders remain concerned with the talk of El Nino and the possible impact on Southeast Asia. Indian monsoon rains are a concern, and traders are also monitoring growing conditions for Indonesia and Malaysia. The move higher this morning came despite a disappointing export inspections report. The report showed US soybean inspections for the week ending May 11 at 147,897 tonnes, down from 397,791 the previous week, the lowest since September 2, 2021, and below the low end of trade expectations. Cumulative inspections for 2022/23 have reached 48.005 million tonnes, down from 48.499 million a year ago but above the five-year average at 43.624 million. Inspections have reached 87.5% of the USDA's forecast for the marketing year versus a five-year average of 79.5% for this time of year.
Today’s Market Ideas
November soybeans traded down to the lowest level since July 22 before closing higher on the day. Close in resistance is at 1243 3/4 and 1251 3/4. July meal experienced an impressive rally off of Thursday's low but hit significant resistance at 442.10 yesterday, and closed lower. Close in resistance is now 436.00, with 426.10 as support. If support gives way it will sour the chart pattern. December soybean oil acts like a short-term low may be in place with support at 47.55, with initial resistance at 50.62 and 51.57.
