Soybean commentary

Soy commentary: Meal hits 18-mth high, beans $10.10/bu on drought

13 Feb 2018

Soybean futures rose for the second successive day to hit a nine-week high as concerns over persistent dry Argentinian weather prompted analysts to slash crop forecasts, which pushed soymeal futures to an 18-month high and beans up on follow-through buying.

Beans for delivery in March on the Chicago Board of Trade opened at Monday’s settle of $10.01/bu and traded as high as $10.11/bu in early trade.

By 1800 London time the contract was valued at $10.10/bu.

Market participants said that influential analyst Cordonnier cut his Argentinian forecast to 50 million mt, identical to last week’s forecast by the Buenos Aires Grain Exchange, while leaving his Brazil crop number at 112 million mt.

“We had some follow through buying from yesterday after getting a foothold at $10/bu, but it’s been about the meal,” said one broker.

The front month meal futures contract on the Board was up $8/st overnight and were valued at $366/st – their highest since July 2017.

That pulled beans higher, with CHS Hedging now estimating resistance is at $10.13/bu.

Other bullish factors include reports that the harvest in Mato Grosso is having problems with humidity, with some crops at 40% versus a normal moisture level of 14%.

That will force sellers to spend more on freight, due to the weight, and more on drying their crop, sources said.

Brazil remains out of the market for the Carnival, although exchange rates suggest the BRL price on the board will be at around BRL1,218/mt when they return– the highest level for months and one that should trigger forward sales.

In the US, as futures rose, basis bids eased slightly with barge bids into the Gulf at around 37 cents over March futures for March delivery and around 31 cents over May futures for April loading on what sources said was "a very active day".

Adding in a nominal 6 cents for elevation costs, Agricensus assessed the two loading months at $387/mt and $388.50/mt.

China cargoes were last heard at $1.54-1.58/bu over March futures, which equated to about $428.50/mt CIF, while European offers were posted around $415/mt.