Soybeans won the race to the bottom in the grain market this week losing 24 cents on the week for the May 17 contract. Corn posted an 11.2 cent loss while wheat lost 12 cents. The massive South American crop production outlook and a wet outlook for the central and southern U.S. in the next few weeks are factors which may boost corn but in my view be bearish for beans. The Buenos Aires Grain Exchange raised its estimate of Argentine soy production in its weekly report yesterday, which is noteworthy as the exchange is rather cautious with its production changes.
The Exchange’s estimate of 56.5 MMTs compares to the USDA’s 55.5, and it doesn’t rule out further upward revisions amid solid early yields in Cordoba province. Chinese import data was released yesterday with soybean imports for the January/February time frame at 13.19 million tonnes, up 29.7 versus last year’s two month total. This week’s export sales total came in for both crop years at just over 800K metric tons. This total bested expectations slightly. Despite the strong export numbers, managed money funds along with the trend and index following funds continue to liquidate long positions. Crop production and an eroded weather premium have the bean and meal market under assault and have these long funds liquidating positions.
Look for some lower levels to be tested on the charts next week before the market firms up into next Friday’s planting intentions report. Those looking for a surprise and a lower acreage number versus expectations for next Friday may consider buying the May soybean 1020 call for five cents, or buy the July soybean 11.00 call for 7 cents or better. Those looking for longer term bearish plays may consider the following. Look to buy the September 920 put and sell 2 September 1200 calls for even money or better. Please keep in mind that shorting call options holds tremendous risk.
Technical’s read like this for this week. For May soybeans support is down at 9.62 and with a close under 9.49 is next. Resistance is up at 9.99 and then 10.22. For May corn support comes in first at 3.51 and then 3.45. Resistance comes in at 3.66 and then 3.76. For May wheat support comes in at 4.15 and then 4.06. Resistance is up at 4.38 and then 4.52.