Commentary:
In my opinion the bean market is setting up ahead of the quarterly stocks and planting intentions report next Wednesday (3/31) as they did pre WASDE in early February and March. Funds bid the bean market higher into those reports fearing a sizable cut in ending stocks that had the potential to reach an all-time low. In February, the ending stocks cut was minor while the March report was unchanged from February as the USDA punted. Given the low ending stocks sitting currently at 120 million bushels tells the trade that’s there’s no room for error here give the USDA export estimate at 2.250 billion bushels. We have already shipped approximately 2 billion. That means we only need to average approximately 10 to 11 million per week which is a paltry sum for the remainder of the marketing year ending September 1. The last 5 weeks has seen the US average over 30 million per week. While the numbers should come down as Brazil has picked up its harvest pace, the math may not add up. In my view the talk within the trade given the insatiable demand amid low supply has the USDA raising its export estimated to come in line with the inspection pace that’s realistic. That would result in a cut in ending stocks in my view. But how much and how aggressive will the USDA get? The next two reports on the 3/31 and the WASDE on April 9 may shake beans from near term lows at 1380 to the upper end of the recent range at 1430. Technical levels through next Thursday come in as follows. See Chart below. For May Soybeans, initial support is 1428 to 1424. A close under and the next level of support is 1403. Under 1403 and the market could push to 1376/77. That is the major level, should that level not hold on a close, its katy bar the door to the 2020 closing price at 1311. If the market gets lower on then year , 1245 could be seen as its 5 percent down for the year. Resistance is 1442, which represents 10 percent higher for year and in my view is minor. The next level then is 1468. Above there and we push to 15.07, which is 15 percent higher on the year. Above that level and the next targets are 15.42 and then the 20 percent threshold at 15.73. Future direction is always the question, which is why I’m keying on some levels here. I just don’t see the beans trading within the recent ranges for much longer. Call or email me with trading ideas using both futures and options.
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