Afternoon Soybeans: Seasonal supply side selling takes over with no fresh export activity to offset.
The soybean market sold off on supply side pressure as increasing crop ratings in early August days along with enough rain showing in the near term forecasts combine to maintain record yield potential. Without any 8 am export activity to offset the seasonal supply side selling, the SX chart broke back to its $8.80 initial support. Interior basis was mostly steady but has been soft. There was some farmer selling around, likely clearing space in what looks to be a bin buster of a new crop, but that selling was not heavy in volume. Export basis remains firm, CIF bids up 1 to +73. The dollar made its high in the first hour of grain trade and spent the balance of the session weakening with a reversal lower.
Bean conditions improved 1 pct week over week to 73 pct G&E (expectations were unchanged). This time last year the crop was rated 54 pct G&E. The states that saw the greatest improvement were Mississippi and Ohio, both up 5%, with Indiana, Louisiana, Michigan, Missouri, and North Dakota each improving 2 to 3%. Only a couple states saw downticks of more than one percent, and those were Arkansas and Iowa, which were down 3% each. Beans are 85 pct blooming vs 68 pct last year and ahead of the 82 pct avg for this date and 59 pct of the crop is setting pods vs 32 pct this time last year and 54 pct avg for this date.
The focus of the market is increasingly shifting to the August crop report on the 12th where the USDA is expected to bump yields to boost ending stocks of row crops.
In the product trade, bean oil began the day making new highs and following the lead of the Malaysian palm oil market that closed +1.35% early in the day but could not hold new highs and reversed lower. Despite the reversal in oil, the oil share continued to gain and the spreading set meal set back for a challenge of contract lows. With beans falling more than the products, board crush margins gained 4 to 91 cents/bushel and have quietly climbed 21 cents off last month's low.
Elsewhere in the news, analysts with AgroConsult expect 20/21 Brazil Soybean acres to expand by more than 1.0 mln hectares to 37.9 mln ha. The group is projecting the 20/21 Brazil soybean production at 132.6 mln mt compared to the 124.7 mln mt in the prior season. Analysts with AgroConsult on Tuesday said they expect 2020 Brazil Soybean exports around 80.0 mln mt, then rising beyond that for 2021 with continued strong China demand. They expect 2020/21 Brazil total Corn production at 110.3 mln mt compared to the 101.2 mln mt for the previous crop year. The total includes 28.4 mln mt of first season Corn production, and 81.9 mln mt of second season corn output. First season acres are expected little changed at 5.1 mln hectares, but second season acres are expected to grow by 5%.
• Bull spreads in beans mostly weaker.
• Board crush margins up 4 to 91 cents/bushel.
• Oil share higher to 35.2%.
US Gulf up 1 to +73
Brazil up 3 to +163u
Cedar Rapids, IA steady -12x
Mankato, MN steady -35x
Decatur, IL steady +5x
Claypool, IN steady -5x by Aug 10
Delphos, OH steady -15x