Jim Riley : Soybean Update

Jim Riley
Linn Group
877-787-6278
jriley@linngroup.com

Jim Riley : Soybean Update

The soybean market was lower on Friday as we continue to see selling pressure from the large expected So. America crop that will be coming on the world market over the coming months.  The March contract closed just slightly lower, but new crop Nov closed down about 6 cents as we are going to have plenty of soybeans in the world market and an big carryout number.  The technicals are probably oversold after what we have seen over the last couple of weeks, but the trend is still lower.  The question becomes how low can soybeans go before planting season.  With the announcement last week on the increase in bio-diesel, it will lend some support to soybeans, more so the bean oil, which could add some support.  The problem is the announcement really takes affect for the 2011 crop, so it shouldn’t have a material affect on prices today.  The volume remains good and funds were light sellers.

Overnight, the soybeans were higher as we saw the market bounce off the lows on probable short covering ahead of the USDA report tomorrow morning.  The USDA report tomorrow morning is a minor report as we only get supply/demand numbers, but we will also get updated world numbers and the market is expecting to see an increase in production estimates for Brazil and Argentina.  The outside markets overnight are trading around unchanged with stocks and crude slightly higher and the US$ slightly lower, so these markets shouldn’t have a material affect on the grain markets.  The soybean market will be called to open higher inline with where the markets closed overnight.  I still expect soybeans to have trouble rallying very far because the huge expected crop from Argentina and Brazil that is coming onto the world market in the coming months, but with the USDA report, we could see some profit taking and lack of selling.   

Early Opening Calls: 10-13 cents better

Globex Overnight

Contract            Last      Net Change       High      Low      Volume
ZSH10              927^0    13^4                  929^6    918^6    6745
ZSK10              938^2    14^0                  940^0    929^4    2696
ZSN10              946^0    13^2                  948^2    938^0    2471
ZSQ10              943^0    14^2                  943^0    939^2    40
ZMH10              274.0    3.0                    275.6    272.7    1434
ZMK10              267.2    2.2                    268.7    266.1    1241
ZMN10              266.4    2.4                    268.0    265.0    720
ZLH10               37.55    0.55                  37.77    37.07    3441
ZLK10               38.03    0.55                  38.25    37.63    1067
ZLN10               38.44    0.51                  38.69    38.09    829

Top News

• Brazil soybean crop is 9% harvested compared to the year ago week when only 4% had been harvested, acc. to Safras Mercado
• Of the 1.0 billion announced by USDA Ag Sec Vilsack late last week, half would be for the biomass crop assistance and most of the balance would go towards underwriting biofuel refineries or retrofitting current plants
• Cash refined palm olein on Monday in Malaysia was quoted $780.00/mt
• Cash refined palm oil on Monday in Malaysia was quoted $765.00/mt
• Malaysian cash crude palm oil prices were in a range of 2,550-2,560 ringgit/mt for Feb delivery and up from Friday's trade
• Deputy Prime Minister in Russia suggested the country needs to export 20 mln mt of grain in the 09/10 crop year
• After growth in wheat prices of 60% from 2002 - 2008 and set by India's gov't, the vegoil industry there is seeking similar price hikes to encourage the nation's farmers to produce more oilseeds to reduce its dependence on imports
• Early poll of grain analysts for next Tuesday's USDA crop data, shows 09/10 Corn ending stocks at 1.73 mln bu down from January's 1.764 mln.
• Early poll of grain analysts for next Tuesday's USDA crop data, shows 09/10 Soybean ending stocks at 216 mln bu down from January's 245 mln.
• Pending Tender: Feb 9th is tender deadline for selling 12,000 mt of RBD palm olein to India's state run PEC, acc. to the company.  Delivery is for last week of March 2010
• Possible Tender: Malaysia crusher, acc. to company official are looking to purchase 80,000 mt of US Soybeans for delivery in late March to early April
• Possible Tender: Traders report that up to 110,000 mt of Latam soymeal is being sought for delivery in March/April by feed mills in Indonesia
• Dalian Sep soybean futures on Monday rose 35 yuan to end the session at 3,812 yuan/mt; Sep Soymeal futures closed up 28 at 2,752 yuan/mt
• Sep vegoil futures on the Dalian exchange were sharply higher, Sep Soyoil jumping 90 yuan to 7,358 yuan/mt; while Sep palm oil gained 104 yuan to end at 6,766 yuan/mt
• Cash refined palm oil on Monday in Malaysia was quoted $765.00/mt
• Liffe May rapeseed futures were +1.75 euro better at 288.25 euros/mt.
• Globex Soybean Vol. 167,490; Pit Vol. 24,121; Open Interest Change: - 571
• Weather: 6 - 10 Day Forecast: Normal to Below Temps. Normal to Below Precip.
• Outside markets: Energy Complex +0.14 at $71.33; Gold & Silver: +12.5 at $1065.3 & +0.160 at $14.990; US $ -0.160 at $80.435

Cash Markets

-- CIF Soybeans steady up 2:  FH Feb. +66 to +68, Feb. +58 to +62, Mar. +45 to +55, April +44 to +50, May +42 to +50, June +45 to +50, July +45 to +50, Oct. +41 to +45

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