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Commentary
Beans closed lower today on weakness in meal and oil amid a continued malaise in the overall grain market as month end comes to a close Friday. China on Tuesday purchased another 3 cargoes for fall shipment that might have gone to the US. The origin was again Brazil. According to people in the know, China has not committed to any 25/26 crop year bean purchases of US origin. That is the current noise and what has been priced in the trade by brokerages, crop scouts, banks etc. Some in the trade have started to worry but yet admit its early. However, the export sales report on August 14th showed unknown destinations bought 424K of beans per USDA. On August 21st Unknown Destinations bought 645K of soybeans for future delivery. That’s over 1 million metric tons in two weeks per USDA. For many years, if not decades, unknown destinations were always spelled C-H-I-N-A. This was always the assumption amid the trade in my opinion. What has changed and why is it different now.? More importantly, who is the is masked country hiding behind the “Unknown” designation? China also announced they will begin weekly bean auctions from their reserves starting Friday of this week, which is seen as a move to satisfy the needs of Chinese crushers. In my view if the auctions are met with good results, it may be seen as bullish as their reserves need to be replenished eventually. Chinese state buyers have usually bought US beans to fill their reserves as US origin is better quality while storing better than S.A. origin. Support for November beans is at 10.37 and then 10.24 and then 10.18. We close below all three levels and its 998. Resistance is last week’s high at 10.62. A close over and its 10.82 and then 10.89. Let’s see if Unknown Destinations shows up on tomorrows export sales.
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Sean Lusk
Vice President Commercial Hedging Division
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