Commentary
Mondays bounce off key trendline support at 11.79 set the tone for some minor short covering in my opinion. Not surprising as each new low in beans on this two-month break sees some bargain buying /short covering. Keep in mind there is reason for this especially heading into Thursday’s WASDE, and next week’s first look at US yield and production from the AG forum in Washington DC for the 24/25 crop. Harvest though continues in Brazil. While yields are below last year in some of their growing provinces, US origin has seen no demand. As previously stated, we did see “unknown destinations” cancel over 400K metric tons following last week’s export sales release on Thursday. The bearish demand news from last Thursday sent beans 43 cents lower from last week’s high to this week’s low. From a demand standpoint, the only positive I see is that crush demand for beans is outpacing expectations by about 10 to 15 million bushels versus the USDA estimate. However, if China continues to cancel shipments, it is highly certain that the cancellations offset the crush demand while seeing ending stocks increase. Looking for a weather premium in S.A. further out may bring some buyers as the transition or switch out of El Nino could keep it very hot while turning dryer in February. Currently that is a big “IF”. Trade the charts is the best way forward in my opinion. Technical levels for the remainder of the week at 1181/1179. A close under and its 11.68 the 10 percent threshold down for the year. Under 11.68 and its Katy bar the door to 11.20. Resistance comes in first at 12.07. Above that level its 1228 and then 1234. Above 1234 and the market could push all the way up to 1278, then the gap at 1291.
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Sean Lusk
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