CBOT Apl8
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Beans and meal starting the day higher. Meal begins the day at lower support while soyoil futures are trying to find a place of support after reaching new trading range highs. With record soyoil length the case, we could see continued weakness triggered by nervous longs who are waiting for the most important report for soyoil to be addressed next Monday.
The Malaysian Palm Oil Board (MPOB) will address palm production, with current figures about 25% below last year. Therefore would look for a slight continuation of the buy meal /sell soyoil trend to stay in place until the numbers are released and clarified on Monday. Mildly supportive to meal is also the fact that Argentina has received extensive rainfall in the last week as harvest continues. While this week features a drier outlook, rains in Argy may return again. Soyoil futures are weaker against meal this morning. The May soyoil low also begins right on key support today meaning that a larger break is going to perhaps create a downside push.
The major feature in the soy complex was that of firmer meal futures against weaker soyoil values. By the noontime hour, May beans were trading back towards previous trading range highs while meal values rebounded off the lows of the trading range past key resistance at 269.00 which triggered buy-stops and short-covering from funds still holding bearish positions. May and July oilshare traded down to 38% after rising over 39% on soyoil's previous continuous strength. Soybean trade firmed towards recent highs as funds added to their overall net long position, balancing it off against a major corn short. July crush values improved towards 60c/bu on meal's technical rebound. Spreads strengthened with July /Nov beans trading into a 6c carry. Traders were buying beans against corn.
Cool wet weather continues to get in the way of corn planting, but next week the outlook begin to head into warmer and drier conditions. Should that occur, corn futures could begin to weaken once more. Directionally traders continue to look for places to sell the market, although since the report those that have sold are underwater. With a cool and rainy forecast this week, would not expect the support under corn to weaken much. Neither can the market rally given the amount of acres posted for corn (93.6 million) on March 31.
Corn futures congested further but maintained a firm direction. The chatter under this market is that 1. we have seen more export business as of late due to lower prices and 2. that northern Brazil's second corn crop is now suffering due to extreme dryness. This is becoming more of an issue as the season moves along and it is attracting more attention as each week passes without rain. May wheat values traded higher on short-covering. Traders were back to buying wheat /selling corn once again.
Fund recap
bot 3000 wheat
bot 5000 beans
bot 4000 meal
sold 1000 soyoil
CLOSING COMMENTS
All weather dependent right now. Feels like the trade has sort of rejected the 93.6 million acres of corn and in the future will be looking at weather both in North and South America given the extreme dryness in Brazil. We are close to trading range highs in beans, which is really a surprise to many traders. Think we go out in continuing strength rather than the other way around, as meal shorts clearly want out. May soyoil may sit and close around 34c refusing to break much but under pressure from traders not willing to buy more until the palm oil production report on Monday is out of the way. Monday will be an important day for soyoil and in that regard maybe for beans as well.
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