Soy Crush Margins Continue to Recalibrate

Front month soy prices are again mixed so far into Thursday. Beans are mostly lower, but mixed within 3 cents of UNCH, while meal is $4 in the red and BO is 49 points in the black. The soy crush margins, which remain elevated after recent record levels, have been in re-calibration mode since the EPA proposal. Soy meal shot higher on Wednesday to within $5.80/ton of the contract high. The 2.8% to 3.2% gains helped pull beans higher as well. Soybean futures closed 17 3/4 to 25 1/2 cents higher with March up by 1.7%. That was the first >$15 close in Jan futures since June 21st. New crop November contracts went home at a 94 1/4 cent discount to Jan. Soy oil was left behind on the rally, closing the day triple digits weaker with a 2.7% loss for Jan. 

Preliminary open interest data shows the bean rally was primarily short covering, with OI dropping 6,843 contracts for the day. That was also true for soy meal, although OI dropped only 1,169 contracts.  Soy oil open interest was down 1,659, which would be long liquidation. Combined, the last two confirm unwinding of oil/meal spreads. 

Crop analyst Michael Cordonnier reduced projected Argentine soybean production to 43 MMT, down 2 MMT from his previous and vs. USDA at 49.5 MMT in December. He has lowered his Argentine estimates 5 weeks in a row.

Brazilian soy exports are forecasted as 1.715 MMT for December according to Anec. That is a slight drop from their prior forecast. Brazilian FOB prices have plunged relative to US offers as new crop harvest begins in some of the micro climate areas.

Jan 23 Soybeans  closed at $15.06 1/2, up 24 1/4 cents, currently down 2 1/4 cents

Nearby Cash   was $14.81 ¼ on Wednesday, up 24 1/4 cents,

Mar 23 Soybeans  closed at $15.14 1/4, up 25 1/4 cents, currently down 3 1/4 cents

May 23 Soybeans  closed at $15.21 1/4, up 25 1/2 cents, currently down 3 1/4 cents