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Commentary
Beans were down all day after Argentina announced a cut in export tax rates on Thursday night, but the market erased some of the losses by the close. Calendar spreads were weaker, as beans lost to the corn, with meal losing to oil. Argentina is getting rain where it’s needed and will continue to see thunderstorms over the next few days. Brazil is seeing rains mostly in the north. Argentina will slash its export tax on soy exports to 26% from 33% and on derivatives of the oilseed to 24.5% from 31% starting Monday and running through June. This is bearish from a demand standpoint as Argentina could yet again be an aggressive export competitor once harvests arrive. Once again, the algo’s saw the headlines with meal gapping lower on the Friday open.
The Buenos Aires Grain Exchange pegged the Argentina soybean crop at 49.6 million tons, down by 1 million tons from the previous estimate. It’s a drop in the bucket compared with the excess crop Brazil is producing versus last year. Conab reported that Brazil’s soybean harvest is 1.7 percent done, comparted to 4.7 percent last year. Mato Grosso, Brazil’s largest producing soybean area is just one percent complete versus 13% last year. China has been absent on exports this week as no flash sales announcements from USDA announced. However, exporters sold 65.4 million bushels of this past year’s corn crop in the week ending January 16, along with 54.8 million bushels of soybeans – the 2nd largest total for this week of the year of the past several decades. Marketing year to date corn export sales exceed the seasonal pace needed to hit USDA’s target by 225 million bushels, while soybean sales exceed the pace by 109 million bushels, with the surplus rising in both cases. China was a big buyer of 32.7 million bushels of soybeans as the Brazil harvest is delayed by this year’s rainy pattern that boosted yields. Beans have simply outperformed expectations so far in 2025, with managed funds flipping long, as good demand both for future shipment and inspection have bested expectations. If we see some Chinese cancellations, it will most likely come from the “unknown category” as that particular destination has approximately 200 million bushels unshipped. Where to from here? March beans is what I’m tracking as that contract is most actively traded. Watch trendline resistance at 10.71 and the 50-week moving average at 10.80 next week. These levels are the mother of resistance. A close above leap frogs this market to 11.01 and then 11.10. (See chart). Support is first at 1052 and its minor. If we take out that out, March beans could slip to the weekly low at 10.39. A close under from 10.39 and it could be katy bar the door back to where the market rallied from to start the year at 10.07/10.10.
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Trade Ideas
Futures-N/A
Options-Buy the April 10.00 puts for 7 cents OB.
Risk/Reward
Futures-N/A
Options-the risk if filled at 7 cents is $350 plus trade costs and fees. I’m out on a stop at 3 cents or if March beans settle above 10.80 in the next few weeks. I’m betting Brazilian harvest pressure and lack of an extended weather premium in Argentina win the day into February. Risk no more than 4 cents here with an objective of 25 cents to exit.
Sean Lusk
Vice President Commercial Hedging Division
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