Afternoon Soybeans: Nearby bull spreads for beans and products under pressure, first notice on Jan futures approaching on the 31st.
<div class=\"default-font-wrapper\" style=\"line-height: 1;font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\"><div style=\"line-height: 1;\"><span style=\"font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\"><strong id=\"isPasted\">The soybean market </strong>failed to hang on to modest overnight strength and spent the day session trading weaker while snapping a two-day recovery off from the contract low. The short covering that supported the market late last week was absent today leaving us with a very quiet, light volume, pre-holiday trade. Demand remains a supportive feature for beans but our export window is closing seasonally, and the lack of forward guidance on biodiesel tax credits clouds the outlook on domestic crush. Meanwhile, the calendar moves forward and Southern Hemisphere crops are being made. The Friday reprieve from currency pressure didn’t carry into this week as the dollar surged .50 pts higher and the Brazilian real futures were back under pressure. January beans settled 5 cents lower and open interest continues to liquidate ahead of 1<sup>st</sup> notice on the 31<sup>st</sup>. The Jan-March bull spread which closed lower for a third consecutive session. March beans settled 3.75 cents lower while the new crop November futures were off by a tick. Beans lost to corn nearby but gained in the new crop, widening the ratio to 2.56%. Domestic bean basis was mostly steady while CIF bean bids at the Gulf were off by a nickel to +86.<br> <br>The grain markets are open this evening and will close early at 12:05 pm cst tomorrow. We are closed for Christmas and will re-open on Thursday morning at 8:30 am cst. <br><strong> </strong><br><strong>The weather forecast </strong>for the Southern Hemisphere features drying for eastern Argentina, Uruguay, western and southern Rio Grande do Sul, Brazil and southwestern Paraguay for the next 10 days at least while the balance of Brazil remains mostly favorable for crops with ample moisture. Crops in these areas are in good shape coming in and temperatures are moderate, but we are entering a stretch of drying down for the near term. Rain is expected to return by early next month but by that time there will be some urgency for relief.<br><strong> </strong><br><strong>In demand news, </strong>the USDA reported private sales of 132 tmt of beans to China and 132 tmt of corn to unknown. The soybean sales follow the rumored purchases made by Sinograin for March-April timing to restock government reserves, although the volume was rumored to be close to 500 tmt. China prefers US beans for stockpiling because of the lower moisture content that stores better than the higher moisture Brazilian beans.<br> <br>Weekly grain inspections of corn were 44 mb down from 45 mb last week,<strong> bean inspections were 64 mb up from 62 mb last week, </strong>wheat inspections were 15 mb up from 11 mb last week.<strong> </strong><br><strong> </strong> <br><strong>In the product trade</strong>, the oil share spread bounced back following a rough week last week. Soybean oil traded firmer with broader veg oil support from Malaysian palm oil and EU rapeseed. Meanwhile the meal futures traded weaker after the two-day short covering event. Meal basis was soft in the eastern truck market. The Jan – March bull spreads for both products established new contract lows. The oil share spread bounced back to 40.5%. Board crush margins grained 3 cents to $1.27/bushel. <br> <br><strong> </strong><br><strong>Elsewhere in the news</strong>, Soybean production in Brazil’s state of Parana is forecast at 22.2 mmt, -.5% from previous estimate but 20% higher year over year according to Deral. First season corn production is forecast at 2.64 mmt vs. 2.59 mmt previously, 95% of the first corn crop is in good condition.<br> <br>First notice on January futures is the 31<sup>st</sup>, there are 205 deliverable bean receipts registered with the exchange, along with 879 oil, and 1,665 meal. <br> <br>The COT report showed managed fund money through the trade week ending 12/17 had -6.4k corn (net short 76.2k), -20.6k srw (net short 87.4k), +3.3k hrw (net short 33.0k), -17.9k beans (net short 76.2k), -16.5k meal (net short 88.9k), and -14.8k oil (net long 2.6k). <br><br><strong>Soybean Basis: </strong><br>Location Spot <br>US Gulf off 5 to +86 <br>Cedar Rapids, IA steady -15f<br>Mankato, MN steady -20f <br>Decatur, IL steady +5f <br>Decatur, IN steady +10h <br>Columbus, OH steady -20h </span></div></div>