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Price action: November soybeans surged 27 3/4 cents to close at $13.45 1/2. August meal futures settles $3 higher at $405.8. August soyoil futures led the complex higher, rising 276 points to 65.33 cents, the highest close since November.
Fundamental analysis: Trade started the week off strong with steady gains across the board as forecasts turn hot and dry next week. This past weekend saw mild temperatures and rain throughout much of the Midwest, says World Weather Inc. This led to favorable conditions for crop development, but dry areas remain where crop stress likely increased. Conditions are expected to remain mostly favorable over the next ten days with showers and thunderstorms coming before a transition to warmer and drier weather that is expected from the middle of next week until July 24, World Weather Inc says. The coming rain is not expected to leave abundant soil moisture to help carry crops stress free through dry period, so conditions could continue to worsen towards the middle of the month.
The USDA releases the weekly Crop Progress report this afternoon, analysts expect soybeans conditions to slightly improve to 51% “good” to “excellent” according to a Bloomberg survey. Conditions improving after rains over the last week would be a good sign, but it would be a warning bell if conditions continue to worsen as it would point to portions of the crop being permanently damaged from early extensive dryness.
This morning the USDA released export inspections for the week ended July 6. Inspections were 238,234 MT (8.8 million bu.) which were within pre-report estimates. Inspections were below last week’s and maintaining below the seasonal pace needed to reach the current USDA forecast. China’s customs agency requiring importers to stage imported soybeans at specific warehouses before they get quarantine permission for the shipments to enter the domestic market will not help U.S. exports as it will likely create a backlog in Chinese ports, due to the shipments process slowing clearing times.
Technical analysis: The rebound in November soybeans points to a likely retest of downtrend line resistance at $13.60 soon stemming from the June 21 and July 5 highs on the daily bar chart. Bulls maintain the technical advantage at this juncture with an uptrend dating back to the May 31 low, retested and confirmed with the $1.20 selloff in late June. The test and break above trendline resistance will be key for bulls this week, although unlikely before Wednesday’s World Agricultural Supply and Demand Estimates. Additional resistance will come in at the June 21 high of $13.78, backed by the July 3 high of $13.91 3/4. Bears want to break the June 29 low of $12.60 with additional support at $13.15 1/2 and $13.00 on the way.
August meal futures powered higher, although gains were largely capped by Friday’s high. Prices have been tightening since the explosive move higher seen in mid-late June with Wednesday’s report being a likely catalyst to break out one way or the other. Bulls are looking for a close above the 100-day moving average at $417.80 with additional resistance at $415.00 on the way. Bears want to take out today’s low which corresponds with trendline support at $401.50, failure of which targets the June 29 low of $390.10.
August soyoil traded at the highest level since last November as price surged above last week’s high. A steep uptrend remains in place in the daily bar chart with bulls holding the near-term technical advantage. Bulls are targeting 67.50 cent resistance before the psychological 70 cent level. Bears are targeting Friday’s low of 62.19 cents before additional support at 61.67 cents, backed by the psychological 60 cent level. Further selling will find staunch support at the 20-day moving average at 58.93 cents.
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