Grain Spreads: July23/Nov 23 Beans

Sean Lusk General Commentary

Commentary

It is my belief that soybean futures ended at the highest levels in over two months behind a rally in soymeal, further indications of strong demand and concerns adverse South American weather may crimp yield prospects. Sharp gains in crude oil futures and weakness in the U.S. dollar also supported prices. Early today, USDA reported a daily sale of 136,000 MT of soybeans for delivery to China during the 2022-23 marketing year. Today’s announcement follows a Nov. 23 sale of 110,000 MT of soybeans to China. Tomorrow afternoon’s USDA October soybean crush is seen at 195.9 million bushels, up from 167.6 million bushels in September but below 196.9 million bushels last October (and slightly behind Oct 2020 as well). Estimates range from 194.0-197.1 million bushels. I included a chart of July23/Nov 23 beans. We traded at settled at the 50 percent retracement level at 87 cents July 23 over. Should we keep rallying look for the spread to trade to 97 cents July over and if that level gets taken out, 1.16 would be the next level of resistance. Support on the spread through next week comes in at 70 cents July over, should that level get violated, and the spread settles under 70 cents, it may signal a near term top is in for beans. This spread sometimes can clue the market of future intentions and is a great vehicle for producers to hedge beans not sold off the combine in my opinion. 

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Sean Lusk

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