Soybeans and soybean meal closed higher on Monday on short covering and corrective buying as those markets are oversold. Naomi Blohm with Total Farm Marketing says there may have also been some positioning ahead of USDA’s Agricultural Outlook Forum at the end of the week.
“We are seeing good support in March soybeans at $11.75 with resistance around $12.00. So, we may see just a 25-cent trading range in the short term. We’ll see what the USDA Ag Outlook Forum has to say later in the week. We are expecting higher acreage, and they’ll have a nice trendline yield for us.,” she says.
Blohm says the market is still trying to determine the crop size in Brazil after discrepancies between USDA and private estimates. “They’re getting to be over 25% harvested on the bean crop down there so they’re going to have a better understanding of where the crop is or isn’t. But really when you have most of the Brazilian companies down there and even their government agency saying the yields and their total production is in the upper 140s that’s very different from what our USDA is saying.” she says.
Even so, she says any rally in the soybeans off a weather scare or production cut in Brazil is an opportunity for additional cash sales.
Corn made new contract lows again early with spillover pressure from wheat but managed to close higher with help from soybeans and corrective buying Blohm says as March corn below $4.30 is cheap with funds short nearly 300,000 contracts. “The question is what else bearish can we throw at the market to justify prices going even lower than this? So, it feels like the market has absorbed most of that news.” The caveat could be the USDA data with growing ending stocks expected.
However, Blohm says rallies will be difficult to sustain because of the large carryout at 2.17 billion bushels. The market is watching the progress on second crop safrinha corn planting in Brazil and any crop problems that may arise. “That could produce a 20 cent or so rally but the question is the timing of that,” she says.
