Afternoon Soybeans: Bean see a modest recovery.

The soybean market managed a small corrective bounce following 4 days of steep losses that saw spot beans drop by $1.41 and new crop November by $1.57.  Today's gains of 17 ½ cents in the July and 8 3/4 cents in the November were modest by comparison but the charts were able to respect support against the lower end of our previous range and stuck a reversal trade with a need to correct an extremely oversold posture.  The bull spreads have held firm despite the flat price washout out and that is a reflection of tight supply in the country.  Basis was mostly steady today on both the export and domestic fronts.  July options expired today - open interest showed most of those 28k $16.00 puts traded yesterday were liquidating trades, open interest went from 24k to 6k and the remaining open puts expired worthless. 

The near term US weather forecast continues to trend in a modestly favorable direction for crops. I would expect to see another dip in corn and soybean crop ratings in Monday's report following the second round of intense heat early in the week with very little rain coverage around. The forecasts going forward are warm but do not include the intense triple digit heat and the maps show better chances for rain for much of the Midwest by early July to bring some welcomed relief as soils continue to dry in the meantime.

In the product trade, soybean oil finally reversed higher to snap a streak of 10 consecutive losses and claw back some ground in the oil share spread. Global veg oil trade was more mixed with Malaysian palm oil posting a 1.7% loss early in the day although canola was able to reverse higher with a 3% recovery trade. Soy meal was also firmer, gaining nearly $6 with bull spread support and firmer basis. Board crush margins gained 18 cents in the July to $1.08/bushel - a one month high - while the new crop added 9 cents to $1/50/bushel.

Weekly export sales came in at the high end or above expectations in corn (1.030 mmt combined) and wheat (478 tmt), while sales of beans (294 tmt), meal (34 tmt), and oil (1 tmt) lagged.

Old crop bean sales of just 29 tmt were a marketing-year low, down 91% from the previous week and 88% from the prior 4-week average. Increases primarily for Germany (68), Colombia (18, including 17 from unknown), Canada (11), Japan (8, including decreases of 55), and China (6, including decreases of 198), were offset by reductions primarily for unknown destinations (92). New crop sales of 265 tmt for unknown destinations (105), Costa Rica (75), China (66), and Japan (25), were offset by reductions for Mexico (7).

Combined old crop soybean sales plus shipments marketing year to date now total 60.238 mmt or 2.213 billion bushels exceeding the USDA's marketing year projection of 2.170 billion bushels. China/unknown account for 6.125 mmt or 68% out of the 9.027 mmt remaining unshipped old crop commitments. There are 10 weeks remaining in the marketing year. New crop sales commitments total a record for this date of 13.370 mmt compared to 9.279 mmt this time last year - China/unknown account for 11.310 mmt or 85% mmt of these new crop commitments.

Trade Estimates for the June 30th Quarterly Grain Stocks as compiled by Reuters:

Elsewhere in the news, China sold 25 tmt at its latest soybean reserve auction out of 504 tmt offered. The average price paid was $746/mt, or $20.30/bushel equivalent. To date, China has auctioned off 2.43 mmt out of a total of 6.84 mmt offered.

The International Grains Council raised its global soybean production forecast for 22/23 by 3 mmt from last month to 390 mmt, an increase of 11% from 21/22 mostly on larger Brazilian production.

Soybean Basis:
Location Spot
US Gulf steady +90
Brazil Paranagua steady +90
Sioux City, IA steady +25q
Mankato, MN steady +20q
Decatur, IL steady +40n
Claypool, IN steady +50n
Columbus, OH steady +5n