Afternoon Soybeans: Meal breaks down and supports the oil share spread.

The soybean market broke down the week's range which has the chart seeking the next layer of support.

The sell pressure today was driven by another escalation in trade tensions with China, a cancellation of old crop soybean commitments, and a near term weather pattern that features rains to support yield potential for much of the soybean crop.

China is preparing retaliatory measures to the US threatened tariffs although what type of retaliation that would be was not clear. The apparent escalation by the Chinese rather than a reciprocal response to the delay in those tariffs is what bothered the market. The Chinese foreign ministry released a statement that they hope the US can meet halfway with it on trade issue. He also says that Xi and Trump are in touch via meetings, phones and letters. Exhausting.

Oil gained on meal in the oil share and the spread is right back up to challenging for new highs while trying to negate the key downside trade early in the week. The spread gains however came on weakness in meal where flat price closed at a three-month low as oil flat price struggled all day and ultimately closed lower too. Exports in meal were within expectations at 274 tmt combined but oil sales were a disappointing 1 tmt. Palm was another factor holding back soybean oil today with a sharp reversal trade of 2% to the downside.

Not everything was a negative though as large new crop purchases in the weekly sales report more than offset the old crop cancellations. The NOPA July crush rebounded sharply and was 10 mb above trade expectations. Soybean oil stocks fell below expectations despite the large increase in production, implying very strong usage.

Weekly old crop bean sales were net -110 tmt and featured a cancellation of 423 tmt by China and 124 by unknown. New crop net sales of 817 tmt went primarily to unknown (586). Outstanding old crop sales on the books total 5.658 mmt with China earmarked for 2.841 mmt of that total and unknown 1.114 mmt. Accumulated soybean exports to date stand at 43.013 mmt compared to 53.891 mmt this time last year. This represents a shortfall of 400 million bushels to last year's export pace, the USDA is estimating exports to fall short of last year by 434 million bushels.

NOPA July crush came in well above expectations at 168.09 mb vs. 155.8 mb expected and 148.8 mb in June. Avg. daily rate of crush was 5.42 mb vs. 4.96 mb in June and 5.41 mb in July of 2018. Oil stocks were 1.467 bln lbs vs. 1.530 expected and 1.535 in June. This implies very strong oil demand. Oil yield 11.73 vs. 11.67 in June. Meal exports 879,319 tons vs. 554,867 in June.

CIF bids at the Gulf up 3 to +39. Interior processor bids steady. Brazilian fob up 5 to +130. Argy fob off 8 to +72.

In the spreads, the soybean bull spreads were weaker. Oil bounced closed higher to 33.1% and fighting off the Tuesday key reversal. Board crush margins steady $1.04/bushel.

Soybean option ATM volatility -firmer led by the back months.