Afternoon Soybeans: Bean oil recovery continues.

The soybean market closed marginally higher with an inside day as trade fatigue seemed to set in with light volumes to conclude what has been another volatile week.   Beginning with Monday's macro-influenced commodity wide flush that took bean prices down to 2.5 month lows, it ended up being an example of 'bend but don't break' as the soybean market eked out a modest higher close for the week. 

For most of the week there has been plenty of smoke around but no fire in the form of export sales confirmations to China. The uncertainty surrounding export demand and absence of 8 am sales announcements has frustrated the bull. Today, the bull spreads and export basis were firm and there is continued chatter in cash channels that China is actively buying. The talk is up to 10 cargoes were sold off the PNW the past two days for Dec/Jan shipment.

US harvest was slowed some this week with rains in the ECB, but drier conditions are forecast moving forward. Crops have been pushed to maturity by the late summer heat and the outlook is favorable for US harvest to advance swiftly with rains primarily limited to TX, OK, KS and NE next week. Early harvest results for soybeans have been supportive to the idea of strong yields which is another factor hanging over soybean market sentiment.

In the product trade, soybean oil continues with its recovery rally out of a 3 month low struck early in the week and the trade seemed invigorated following Wednesday's alleged fake news RFS episode. Malaysian palm oil wasn't a factor in the bean oil strength today, palm closed marginally lower early on although palm did trade up into a new contract high. Canola gained $11 but overall remains in a broad sideways range for more than two months. Crude oil gained nearly 1% and established a new contract high over $74.

The COT report showed managed fund money through the week ending 9/24 +2.1k corn (net long 214.3k), +514 srw (net short -5.4k), +1.3k hrw (net long 39.4k), -5.6k beans (net long 49.5k), -2.2k meal (net short -18.5k), and -8.1k oil (net long 38.9k).

October options expired today while next Thursday we'll look forward to a big day featuring export sales, quarterly stocks and month/quarter end.

Elsewhere in the news, Chinese state planners are working to resolve power shortages that have disrupted production since the end of June, when new measures to curb emissions kicked in. The state planner focused on the country's fertilizer sector as a segment that has been particularly impacted. It urged the country's main energy producers to fulfill their supply contracts to fertilizer makers. The power crunch has resulted in soaring prices for a number of raw materials and caused at least three soybean processing plants in Tianjin to close recently.

A Reuters survey puts the avg. trade est. on Brazil's 21/22 soy crop at 143.75 mmt (new record) and up 5.7% from last season with planted area at 40.31 mmt, up 4.6% from last season.

Paraguay soybean plantings are est. at nearly 3.7 million hectares in 21/22 and producing more than 10 mmt of the oilseed which compares to last season's crop of 9.9 mmt.

Soybean Basis:
Location Spot
US Gulf +3 to +78
Brazil Paranagua off 5 to +220x
Cedar Rapids, IA steady -20x
Mankato, MN steady -30x
Decatur, IL steady -10x
Claypool, IN steady -5x
Columbus, OH steady -10x
Davenport, IA off 1 to -55x
Morris, IL up 7 to -38x