AgriVisor Soybean Commentary

Monday, November 23, 2015

***** Fundamental Analysis: The big news in the soybean trade was the results of the Argentine election, bringing a new regime to power, one that is expected to be pro-business.  Talk about reduction in the export tax has been the key focal point or recent. Macri has talked of a 5% reduction immediately, with a phase out over a number of years.  We’ll learn more details in ensuing weeks, along with what his plans might be for the differential between the official and black market rates on their currency, the Peso.  That could be just as important, if not more so, than a change in the export taxes.  But for both, we’d be inclined to see gradual changes.  The 68.1 mln. bu. export inspections were off from last week, but still good. Seasonally, they’ve tended to start slipping at this time, especially with the holidays.  If they hold up better than the seasonal trend, it would hint demand may be better than given credit for.  But the big issue going forward is going to be potential for the S. American crops.  The center/west and eastern areas of Brazil are still only getting scattered showers, causing some worry about the output from these areas.  And because they now account for over 50% of Brazil’s crop, the absence of good signs the rainy season has started is not going unnoticed.  Southern Brazil has good moisture, while if anything, Argentina may be a little too wet. Our producer selling remains light.  Futures are flat and basis is firm. Hedge funds remain slightly short soybeans, but didn’t alter their position that much the week ending Tuesday.

***** Tech Comment: Even though Juan. Soybeans still haven’t close over Wednesday’s $8.67 1/2 high, the reversal up they had on Monday shouldn’t be ignored.  The reversal and close at the upper end of the range left it poised to test that high.  A close over $8.67 1/2 high sets it up for a test of important resistance at $8.78, and possibly stronger resistance either side of $9.00  It really needs to get over $9.00 to significantly diminish the negative attitudes prevailing at this time.  The inability to sustain selling under $8.50 was an indication the decline may have become exhausted.  But if Jan. would close under $8.50, it could break toward $8.00-$8.17.  From a cyclic perspective, soybean prices don’t have a 16-18 week low until late January.  If prices can turn up from here, this may have been the seasonal low and maybe a 2 year low, but with the next 16-18 week low coming in late Jan, near term rallies may not be very strong, and may not get much, if any, beyond $9.

***** Basis Trends:  Gulf +59 – dn 3, Eastern Corn Belt – stdy/dn 2, Western Corn Belt – stdy/dn 2.

***** Basic Recommendation:  **** The soybean..... ​   Premium Service Only

***** Cash Marketing Strategy:  Basis is.....   Premium Service Only

***** Futures/Options Strategy/recommendation:   Premium Service Only

***** Basic Position:   Premium Service Only

***** Hedge/Option Position: Premium Service Only