Commentary
Soymeal traded higher today. I’m wondering was that due to the crush number released after the bell today, amid short covering ahead of the report ? Or did the trade anticipate a strong crush number and bulls use the recent dip as a buying opportunity given the recent weakness in bean oil as the oil share trade weakens some. These could be a few potential reasons that the market traded higher today. There wasn’t much else in my view of note for the rally. After Fridays deep low volume sell-off followed by the plunge yesterday across the grain Board, that a little short covering and profit taking could have been in order. Since the Lysine report a few weeks ago that possibly sent soymeal end users on a buying spree in to the meal market for feed need coverage, the market has come over half way back. A fifty percent retracement from the October low/November high came in around 345.0 basis January futures. We settled today at trendline resistance and just below the 100 day moving average at 351.0. A close over and we could retest the recent highs at 380. A failure here and 330.0 could be seen quickly in my opinion. Black swans are circling all over the World as new variants emerge and lockdowns are discussed. Fund are long over 40K contracts of meal, 70K of bean oil, and only 15K of soybeans. These are approximations versus the last CFTC data. Today’s crush number had the USDA reporting U.S. October soybean crush at 5.91 million tons (197 mln bu), above all trade estimates and the average of 5.868M (195.6 mbu). That slightly tops October 2020 at 5.90 million tons, which Reuters reports is the all-time record for any month. Lets see if any of this matters moving forward.
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