Commentary
Soybeans, which were led higher today by soymeal in my view rallied over 30 cents early this AM but finished well off the early morning highs to finish just above trendline resistance at 14.54. Strong demand news early this morning set the stage for today’s rally in my opinion. USDA reported daily soybean sales of 264,000 MT for delivery to China and 240,000 MT for delivery to “unknown destinations,” both for the 2022-23 marketing year. Today’s announcement follows three separate daily purchases by China since Nov. 23 totaling 376,000 MT. While the overall sales lag slightly behind USDA projections, it signals to the market that China both on inspections and sales for future shipment is still very active for beans of U.S. origin. Argentina’s pesos for soybeans program spurred the sale of roughly 2 million metric tons of soybeans so far, but Chinese buyers thus far have purchased very few of those old-crop soybeans. Instead, they’ve been busy buying U.S. soybeans which was confirmed with today’s flash sales announcement. Meanwhile, the drought continues to intensify in Argentina, slowing planting progress, while stressing the crop that is in the ground. Argentina is the world’s largest exporter of soymeal and soy oil, so that raises risks of lower soymeal availability over the coming year. Meal has broken out on the charts in my opinion. In fact, a key area of resistance at 4.40, has been finally surpassed. It has failed at that level 5 times since Spring. Todays close establishes a possible new range. Look for the meal market to pull back to the aforementioned 4.40 level basis January futures. Should we hold support at what was strong weekly resistance going back months, I would look to be a buyer or establish a bullish option strategy in my opinion.
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