Soybean Oil Futures Market News and Commentary
Soybean futures saw 2 to 2 3/4 cent gains in the front months on Monday. Meal futures were up a dime/ton, with soy oil 16 points higher. USDA indicated that 857,970 MT of soybeans were exported in the week that ended on March 21, according to this morning’s Export Inspections report. That is slightly higher than last week and 20.84% larger than the same week a year ago. Of that total, 335,241 MT was headed to China. AgRural estimates that the Brazilian soybean harvest is 67%, vs. the average of 63%. Chinese customs data shows that the country imported 907,754 MT of US soybeans in February, up sharply from January, but still lagging 3.35 MMT in the same month last year.May 19 Soybeans closed at $9.06 1/2, up 2 3/4 cents,Jul 19 Soybeans closed at $9.20, up 2 3/4 cents,Aug 19 Soybeans closed at $9.26, up 2 3/4 cents,Nov 19 Soybeans closed at $9.39 3/4, up 2 1/4 cents,May 19 Soybean Meal closed at $315.10, up $0.10,May 19 Soybean Oil closed at $28.82, up $0.16 --provided by Brugler Marketing & Management
If you’re keeping up to date on my basis postings, you’ll recall my most recent piece on soybeans (“Soybean Basis: The Weight of Futures”) talked about the often-inverse relationship between futures and basis. In other words, if the futures market posts a strong rally, grain merchandisers will often soften basis a bit on the idea that futures will do a good enough job of sourcing enough supplies to meet demand. Last week saw national average soybean basis firm, slightly, despite solid gains in futures, until Friday.Spring wheat was different, though. Here we saw the national average basis (cmdty National Hard Red Spring Wheat Index minus futures) actually weaken as the futures market firmed late in the week. To be exact, the May Minneapolis futures contract gained 5 1/2 cents, paltry indeed compared to the rest of the grain and oilseed complex, while national average basis weakened 1 1/4 cents from the previous to finish at 53 1/4 cents under the May. When one considers much of the U.S. Northern Plains remains buried by feet of snow, in mid-March, it seems counter-intuitive that spring wheat basis should be weakening.Until you factor in where bushels are being held. Most of the wheat in the U.S. winds up in commercial storage, where ownership is more easily transferred from seller to buyer. Therefore, if one doesn’t have to wait for the snow to melt before pulling grain out of an on-farm bin, it creates a situation where winter (into spring) weather doesn’t create a similar search for supplies like what has been seen in corn and soybeans. Darin NewsomPresidentDarin Newsom Analysis Inc.