Keep an Eye on Soybean Spreads

Published on: 08:11AM Jul 14, 2014

The grain markets appear to have a little overnight strength carrying them into this morning with soybeans trading up 9 ¼ cents, wheat trading 1 ¾ cents higher and corn down 2 ¼ cents.

 

Friday's USDA supply and demand report left many traders scratching their heads last week as old crop soybean ending stocks was lifted 15 million bushels primarily due to negative residual use, which surprised analysts, while new crop ending stocks came in a couple million bushels shy of analyst expectations. The result was a sharply lower trade, and a rapid unwinding of the bullish calendar spread between the August and November contract. On Friday morning that spread opened at 139 ¼ cents and printed a low of 94 ¼ cents before rebounding back close at 120 3/4. This morning that spread has gained another 6 cents and now hovers around its 200 day moving average. Keep a close watch on tomorrows NOPA crush numbers which will be released tomorrow at 11 AM CST. 

Corn futures have continued lower in the overnight session following Friday’s negative report. 2014/15 ending stocks were reported 25 million bushels higher than expected and we saw global ending stocks raised 3% for the upcoming marketing year. Demand side numbers will indicate the bottom on this market and over the weekend we have Israeli tendering for 108,000 metric tons of optional origin corn. Considering the recent price slide U.S. corn will be very competitive in any tenders moving forward. $3.80 is the next area of technical support looking at the weekly chart. This is from trend line support looking back to September 2012. If you’d like help adding this trend-line to your trading software just call the office, 877-472-4607