Focus begins to shift to US supply; bears coming back?

March 14, 2018 10:43AM CDT

The soybean market seems to have priced in any type of weather issues out of South America and has begun to shift its focus over to US supply, or the possibility of a trade war with China, fund traders could lighten up on long positions.  If US producers plant more acres than the current USDA projection and yield comes in at 50 bushels/acre or so, then the market could struggle to avoid record high ending stocks.  Soybean meal rebounded yesterday with a strong push higher.  May soybean meal settled up $5.10 yesterday and is showing solid gains this morning on further Argentine production declines.  A noted South American crop scout lowered their Argentine soybean production by 2.0 million tonnes to 43 million tonnes, with a negative outlook moving forward.

The meal spreads rebounded yesterday with a rally in the outright price, but soybean spreads fizzled out.  The nearby may/July traded down to -11, down 1 cent on the day and matching contract low.  Resistance for May soybeans comes in at 1056 and 1064, with support at 1031 and 1018.

Soybeans May '18 Daily Chart


RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.