Commentary
The energy sector, the rally in wheat, and recent strength in corn prices have aided beans here as they remain above 12.00. Whether the market stays above $12.00 is anybody’s guess at this point as there is a strong inflationary commodity tone. Natural Gas has been the leader in energies and to me is the bellwether here. Should its recent price correction from 6.50 to 5.20 become more aggressive, it could put more heat on bean oil and lead to a deeper correction in beans. We could also see further harvest pressure as the combines roll that has found better yields due to late August rains. On the demand side the market saw China/unknown Destinations book a decent amount of beans for future shipment last week. We need to see this continue. The market psyche could switch on focusing on a record bean crop coming out of Brazil in early February along with the spotty demand we have seen from China in the last month. Today’s export inspection numbers were at least encouraging in my view. The U.S. inspected nearly 2.3 MMT of soybeans for export the week ended Oct. 14, up from 1.74 MMT the previous week. Expectations ranged from 1.6 MMT to 2.1 MMT. This signals to me that grain terminals down at the US Gulf are back near 100% following the hurricane led shut-downs. Managed money accounts cut their net long position in soybean futures and options for the second consecutive week, to 29,068 contracts as of Oct. 12, the lowest since August 2020, according to data from the Commodity Futures Trading Commission. It will be interesting to see if funds flip negative here. Hard to fathom considering the balance sheet estimates below 200 million bushels just 2 months ago. For beans to rally near term, they will need help from outside markets in my opinion.
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