Afternoon Soybeans: Conab hints at downward crop revisions for 18 and 19?
The soybean market gave back yesterday's gains after faltering at the $9 resistance area and has developed a rough $8.75 to $9.00 type of trading range for the moment. The oil share spread bounced back after yesterday's outside day lower, you would like to see another higher close to negate that technical signal. The gains in the spread were all on weakness in meal settled back under $300 and was unable follow through on yesterday's outside day higher. Meal basis in C IL was down a dollar to -17u.
Weekly export sales are reported in the morning with the trade estimating corn exports ranging from 200-600 tmt, wheat from 200-500 tmt, beans 150-700 tmt, meal 175 to 400 tmt and oil 5-25 tmt.
July NOPA crush comes out tomorrow with the avg. trade estimate at 155.8 mb compared to 148.8 mb in June where flood related disruptions and a break in margins reduced activity. Oil stocks are estimated at 1.530 bln lbs compared to 1.535 bln lbs in June.
A possible downward revision to Brazil's 18 and 19 soybean crops could be coming due to some discrepancies with private-sector estimates which raised doubts about the official government S&D numbers. CONAB's director of information Bastos mentioned a hefty soybean export forecast by Abiove as one factor triggering the ongoing revision. "The balance of supply and demand is tight, there is no space for exporting 72 mmt of soybeans" this year he said, according to Reuters.
The USDA currently pegs Brazilian soybean exports this year at 76.5 mmt. Safras estimates Brazil soybean august export volume at 5.271 mmt with Feb-Aug total exports at 54.401 mmt to date. Considering the free fall in Argentina's currency that could potentially lead to the farmer down there holding onto the balance of his crop as an inflation hedge, you can be sure the Chinese are paying close attention to this news with their coverage through the end of the year still pretty wide open. It is estimated they have covered 50% of their September needs, 10% of October and nothing yet for Nov, Dec and Jan before Brazil's yet to be planted new crop begins to come online.
Elsewhere in the news, Soybean oil margins are being raised by the CME at end of biz today. Aug thru Dec margins are being raised from $490 to $565, Jan and March (2020) margins are being raised from $470 to $545 and May (2020) thru Dec (2022) margins are being raised from $465 to $545.
Near term weather is dry in the east and wet everywhere else in the 5 day. GFS 6-10 day and 8-14 day forecast is hot and wet.
CIF bids at the Gulf up 1 to +36. Interior processor bids steady to lower, Bloomington, IL off 3 to -18x. Brazilian fob off 3 to +125. Argy fob steady +80.
In the spreads, the soybean bull spreads were mixed. Oil bounced back to 33.0%. Board crush margins up 1 to $1.03/bushel.
Soybean option ATM volatility - slightly firmer.