Soybean Morning Update & Commentary: After a stretch of consolidation, beans pop back above $14 in the old crop
Overnight grain markets featured beans popping back above $14 along and trading at their highest point since establishing new contract highs in the old crop 5 weeks ago while new crop continues to make fresh highs in effort to secure every acre possible this spring. Bull spread strength is an early factor after an extended stretch of weakness. Interior bean basis remains steady/firm with minimal farm selling around while barge basis at the Gulf is up another penny to +76.
A combination of ongoing harvest delays in Brazil and a less than ideal weather forecast for both Argentina (too dry) and Brazil (too wet in the north) are supporting the strength in the soy complex.
In the product trade, soybean oil is gaining on meal by trading into fresh contract highs that have pushed the spot oil share spread out to a 13 month high. Strength across global veg oil prices is continuing to support the soy complex higher from the product side. Spot board crush margins are 4 cents lower to 70 cents/bushel with the July crush sitting at 56 cents. Meal remains range bound but has again defended its lower range support at $420. Canola continues to accelerate topside with fresh all time highs trading over 426 CAD. Malaysian palm oil closed +3.7% and established a new contract high to 3,676 ringgit with support on Feb 1-20 exports up by 15% from January's pace.
Cordonnier made no changes to his weekly SAM production estimates with Brazil's soybean crop at 130 mmt (USDA 133 mmt), Brazil corn 105 mmt (USDA 109 mmt), Argentina soybean 46 mmt (USDA 48 mmt), and Argentina corn 45.5 mmt (USDA 47.5 mmt). He noted upside potential of 1-3 mmt on Brazil's soybean crop if rains were to magically end. Soybean disease and pod abortion due to excess rain and lack of sunshine have been problematic in Mato Grosso and Parana.
In the news:
• Grain trade sources Tuesday say there are at least three participating firms in Jordan's 120,000 mt feed Barley tender today. No purchase has been finalized yet.
• Showers on Argentina's Pampas grains belt in recent weeks have helped make up for the dryness that parched soy and corn crops from the middle of last year, weather experts said on Monday. Farmers are now hoping for enough rain to boost yields after the country's two main cash crops were hit by an unusual lack of precipitation before a resurgence of wet weather in January.
• On Tuesday, China's commodity reserve manager said they will sell 20,000 mt of frozen Pork from state held stockpiles on Feb 26th. With this latest announcement total pork sales have totaled 190,000 mt since January 2021.
• Chinese customs on Tuesday said it has halted imports of Algerian poultry due to the presence of H5N8 bird flu, they join poultry ban imports by China from France and Ireland.
• Some analysts say there are signs of slight strain in Europe's poultry industry. They noted Poland's egg supply is slipping due to lack of laying hens from avian flu outbreaks. Around 5 mln birds have been culled in Poland this year due to the disease, for perspective, back in 2019 there were 6.4 billion birds harvested across the EU for meat production.
• US EPA on Monday said they agree with 10th Circuit Court decision on small refinery exemptions for biofuel blending law
• North Dakota cattle and calf conditions rated 1% very poor, 6% poor, 31% fair, 49% good, and 13% excellent. Cattle and calf death loss rated 2% heavy, 42% average, and 56% light. Calving progress was 10% complete.
• Colorado livestock conditions 3% very poor, 8% poor, 41% fair, 42% good, 6% excellent
• Pending Tender: Grain traders Monday said Algeria has set Wednesday, Feb 17th as offer deadline in a tender seeking 50,000 mt of feed grade Barley. However, offers should remain valid until Thursday, Feb 18th. The grain is for shipment in LH March.
• Pending Tender: Grain traders on Tuesday said Jordan has set Feb 23rd as the new offer deadline in a tender seeking 120,000 mt of feed grade Barley.
• Euronext Paris June corn futures on Tuesday are trading +0.25 euro higher at 220.00 euros/mt
• On Tuesday, Dalian May corn futures traded -31 yuan lower ending at 2,781 yuan/mt
• Outside markets. Crude Oil +44c ; Gold +$3.50 ; Silver +2.9c ; US $ index +11 pts
Early spread action:
• Soybean bull spreads firm.
• Board crush margins off 2 to 71 cents/bushel.
• Oil share 36.2%.
• New crop bean/corn ratio 2.60%.
US Gulf up 1 to +76
Brazil Paranagua up 10 to +10h
Cedar Rapids, IA steady -20h
Mankato, MN steady -20h
Decatur, IL steady +15h
Claypool, IN steady +35h
Columbus, OH steady +10h