Grain Spreads: Manic Beans

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Commentary

Volatility continues to dominate the soybean markets. The main driver of price action earlier this week was the delay of the Trump-Xi summit which caused concern on the country’s appetite for U.S. soybeans going forward. Improved technical posture to end the week is a positive sign, but work remains to be done for the contract to shake off the limit-down day that the old-crop contracts experienced on Monday. Data from NOPA (National Oilseed Processors Association) that surpassed all analyst estimates is a sign that while foreign demand is in question, domestic crush use continues to be a bright spot. The organization’s recent report showed a record daily crush use for the month of February. The extra enforcement of phytosanitary standards for soybean shipments from Brazil to China has some optimism shifting toward the US as well, with the enforcement halting some port activity.  President Trump has invited farmers and biofuels producers to the White House for a March 27 agricultural event lifted hopes long-delayed fuel blending quotas for 2026 and 2027 will be a boon for demand. Thursdays release of export sales for last week reached 85.8% of the USDA projected forecast, down from 91.4% a year ago. The largest buyers were China, Mexico and Unknown last week. However, it's a well-known fact that export demand in the US has been lacking and the markets focus is on the energy and fertilizer price shock. This should keep prices well supported on pullbacks provided that the war goes on. Funds are loaded up long at over 635K among all classes. At some point they will clear out their books and lighten up prior to planting and growing season. That said, if the conflict with Iran is prolonged, the grains most likely stay bid in the near term. No trade recs into weekend.

Trade Ideas-N/A

Risk/Reward-N/A

Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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