Grain Spreads: July24/Nov 24 Bean Spread

Sean LuskGeneral Commentary Leave a Comment

Commentary

It is my belief that after Fridays sell-off, we saw some short covering by funds ahead of Wednesday’s 11am WASDE release from USDA. However, the big winner today in beans was old crop vs new crop. The spread in my view was aided on a few fronts. First, that US end users improved their bids by 5-10 cents in some parts of the central Midwest to possibly stimulate some producer selling. Second, Brazil’s basis at their ports improved by a dime as well.  Brazil is completely harvested, and in my view the producer now has the upper hand on when they might sell. The US producer is nearing the close of the planting season. Brazil continues to hold the advantage vs. the US, landed China, but the much-improved basis at Brazil’s ports is making that advantage ever so small. Crop progress released by the USDA showed the US bean crop at 87% planted and 70% emerged. We also had our first look at bean condition as good to excellent came in at 72 percent which was the expectation. July/Nov spread attached. The spread remains supported on breaks but has had a hard time breaking 32/34 cents July over. If it can finally surpass resistance, look for higher bean prices across the Board. July/August beans traded back to 5.4 cents July over. The spread continues to invert. Should that remain beans are supported in my opinion. Bean demand is sluggish but that’s been a known in the market for a while. We are supply side driven now amid tight producer selling here and in South America. Watch the spreads for clues for direction in beans in my opinion.
 

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Sean Lusk

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