Soy commentary: Futures stable at close to seven month high

Soybean futures remained close to their seven-month highs on Wednesday as the market continued to digest news of the likelihood of a significant shortfall in the Argentinian crop due to dry weather.

The balance of February looks to be drier than hoped, according to analysts, but news that rains will return during the first week of March are looking to be too late to stop a yield decrease.

As such, futures for March delivery were valued at $10.35/bu by 1800 London time, up 5 cents on the same time on Tuesday.

“CBOT soybeans are expected to further appreciate today on forecasts for Argentina to see little rain from now through the weekend. Weather forecast for March offers a wetter bias but the crop should see yield losses by the end of this month,” said Terry Reilly, an analyst with Futures International.

Elsewhere, gossip in Argentina was that beans would need to reach $11/bu to bring farmers out to sell, with domestic crushers happy to pay 6,000 pesos per mt to get beans.

While that equates to $302/mt, once Argentina’s hefty export taxes are added on FOB theoretical prices are above $400/mt.

Argentina’s directorate of agrifood markets reported January crush at 2.8 million mt, up 25% on December, while soybean stocks were pegged at 941,000 mt on February 1, down 26% from the January 1 figure.

The year-to-date figure shows bean crushing so far at 15 million mt, down from 17 million mt on the Sep-Jan figure for 2016/2017.

Elsewhere, one deal was heard with CHS selling a cargo of Brazilian beans at 74 cents over July for July loading FOB Santos.

In the cargo market in Brazil offers were steady for March loading at 78 cents over March futures and April at 60 cents over May futures FOB Santos.

That compared with bids on the paper Paranagua market at 60 cents and 50 cents over the relevant futures.

With little heard for prompt, Agricensus kept FOB Santos steady at a 66 cent and 55 cent premium over the relevant futures, equating to a flat structure at $404.50/mt.

In the US, CIF barge bids were steady for March at 36-37 cents over March futures, while April firmed slightly to 28-29 cents over May futures.

Two sources pegged April cargo value at 40 cents over May futures and Agricensus kept its assessmenet for April steady at that premium, equating to $399/mt FOB USG. March was kept flat to April.

In China, the CIF price moved up in line with the futures move, alongside delivered prices into Europe.