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

soybeans_may18_daily_chart

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