Price action: May soybeans fell 14 cents to $14.83 1/2, ending the session below the 20- and 40-day moving averages and down 17 cents on the week. May meal closed $5.60 lower at $445.70, a $14.00 drop from last week while May soyoil fell 103 points to 53.40 cents.
5-day outlook: An early-week rally turned ill-fated after bulls failed miserably in testing resistance around $15.27 for the third time this month, handing the opposition increased momentum for a downside move. A record crop and advancing harvest in Brazil continue to weigh on futures, with additional bumps in expected production, despite a fading crop in Argentina, stealing confidence from bulls, with lackluster U.S. exports serving up the proverbial icing on the cake. Cheap soybean basis premiums in Brazil have restored China’s buying interest, along with U.S. purchases amid tight supply. While China’s Brazilian bean purchases were tepid in March, it has been noted that purchases have picked up in the past two weeks. Remarkably low basis premiums in Brazil in the last week coupled with higher domestic soymeal prices sent crush margin higher in China, making the Brazilian purchases more attractive. Traders will continue to monitor purchases from China in the near-term following rumors the country has covered most of its needs for May and June.
30-day outlook: U.S. weather will play an important role in price direction as spring planting efforts continue to progress throughout the Midwest. A slow start in the Delta and southeast due to persistent rains, along with lingering snows and flooding in the northern Midwest, could ultimately affect acreage, though there is still ample time before the optimal planting window closes. Moreover, recent warm weather through much of the Midwest provided many producers an early, extended window for sowing, though increased moisture prospects combined with colder temps could ultimately affect some emerging seedlings. World Weather Inc. notes planting will likely be delayed over the next ten days, but improving conditions in May should induce more aggressive planting at the end of this month, though the forecaster indicates cooler conditions may be present in late April as well.
90-day outlook: The global landscape will be the main market influencer as the marketing year progresses. Intrinsically, traders will continue to monitor economic data and export sales to gauge the global landscape. Earlier today, S&P Global released its Purchasing Managers Index (PMI) estimates for both manufacturing and services in the U.S., which showed U.S. manufacturing PMI rose from 49.2 in March to 50.4 in April, topping expectations of 49 and signaling the first increase in factory activity in six months. Furthermore, the U.S. composite PMI increased to 53.5 in April, up from 52.3 in March, indicating the fastest increase in business activity since May 2022. While undoubtedly the data seems positive on the surface, it could mean the Fed will continue its rate-hike journey, which could lead to a further breakdown of the financial industry.
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