Soy Complex
Old crop/New Crop bean and meal spreads are under assault and have led the way lower in soybeans today while Bean oil gets a dead cat bounce off of weakness in meal. I believe that beans look heavy here as the domestic carry at 550 million bushels weighs on price while South American basis has fallen some from previous highs. With Friday being option expiration and month end next week, funds can squeeze remaining shorts higher if they decide to add to their sizable existing long. I wouldn’t rule it out but the technical action tells me otherwise in the near term. That to me is predicated on meal. July/Dec meal broke key support at 8.40 July over settling near 4.0 over today. This spread can work down to parity or a small carry. Similarly, July 18/Nov 18 beans broke support as well and has dropped appreciably from 15 cents July over to 7.4 over in just a few days. This spread too can move to parity and fill a chart gap to the early January lows at negative 5 cents which would be another 12 cent drop. As the bean market rolls from May to July, technical’s come in as follows. Major support in July beans is 1038.4. A close below and the market could push to 1028.4. Overhead resistance is at 1064, next stop is at 10.80 and then 11.00. If July meal closes over 386.0, don’t discount a rally in beans to the aforementioned resistance levels. Trade the charts.
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