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Commentary
A rally in the energy complex and a sizable export sale on soy meal gave the entire soy complex early support. Guatemala was in and booked 101,400 metric tons of US meal. Soybeans were also supported by the trimming of the US projected yield where no yield loss can be absorbed in current balance sheets from a supply side standpoint. However, until we see demand prospects into China become realized, there is no reason for trend and index following funds to build a long position as it stands now. Beans, Meal, and Corn ended slightly lower on the day.The Argentina news this week has garnered much attention this week. In my view there has been a mixed reaction to Argentina cutting its export tax on soybeans is also giving that complex support. While data shows Argentina has roughly 21 million mt of soybeans it could export, it is reported that crushers in the country are worried these sales are cutting into their future needs. Argentina is a crushing nation, not a major soybean exporting nation. It hasn’t been a sizable net exporter for 7 years. It crushes 85% or more of its production. What levels it exports, it turns around and imports approximately the same quantity in the last 7 years. Corn saw another flash sale to Mexico this morning, extending the sales streak to four consecutive days. This one was a sizable 312,956 metric tons. Corn still struggled as even with mixed yield reports; new crop bushels are starting to find their way into the supply line in my view which is halting any advance in corn above 4.30. Watch the energy complex for direction near term. Diesel looks poised to break out as does crude oil futures in my opinion. Escalations in Eastern Europe seem possible with new trade deals possibly close with Asian countries that may include energy and grain purchases. We should also see re-positioning ahead of month and quarter end here as well as the quarterly grain stocks report at month end.
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Sean Lusk
Vice President Commercial Hedging Division
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