The soybean market finally got confirmation of the China soybean cancellations that it has been waiting for this morning, or at least they got part of them. China cancelled 272,000 MT of US old crop soybeans but purchased 240,000 MT of US new crop beans. So it’s almost like they just rolled the cancellation forward. Now the question will be how much more, and when?
There was talk of 6-8 cargos in total being cancelled or resold for Feb/Mar days. So we have confirmation of 2 now. On the charts, March soybeans pressed resistance overnight (once again) at the $13.40 highs seen in early Feb and Mid-December. However, news of the cancellations is pressing the market lower following the morning pause.
The news is on the surface, so we’ll see if the market presses lower or if buyers are there to pick up the pieces and we can reverse higher again like yesterday. Open interest has built nearly 50k in the past week. Brazil’s, government agency CONAB estimated their nation’s soybean crop at 90 MMT yesterday morning, down from 90.3 previously, but right in line with the updated USDA forecast.
Most still think there could be some more downside to that number due to the dryness the past 2-3 weeks. Speaking of that dryness, a high pressure front is forecasted to deliver rain to Brazil February 15-20th. The trade will be watching for updates as those storms develop over late crop beans that have been stressed by hot temps and a lack of rain during bloom.
In yesterday’s price action, the soybean market was largely two sided. Morning weakness in the market, found support through the day session, pulling beans nearly 20 cents off the lows. Soybean basis at the gulf and in the interior was firm today, which helped in the reversal. After the close, March soybeans were 9-1/4 cents higher at $13.34-3/4, while new crop was up 7-1/4. Open interest gained 6,861 on fund buying, and has gained nearly 50k OI in the past 4-5 days.
Yesterday’s rally helped add a penny to the average February price for Revenue Protection, which stands at $11.16 so far. Additionally on the world front, China’s Administration of Customs reported January Soybean imports at 5.9 MMT up 23% from January 2013 but down from Decembers 7.4. China’s NGOIC says China’s February Soybean imports will continue to grow on the year.
LaSalle Street News Top News
— USDA announced cancellation of 272,000 mt of soybeans to China for the 13/14 MY
— USDA reported private sale of 240,000 mt US Soybeans sold to China for the 14/15 MY
— In a tender that closes on Feb 20th, Egypt’s state run FIHC announced Wednesday they’re seeking 20,000 mt of Soyoil for delivery between March 25th to April 15th.
— Cash sources say India’s MMTC bought 22,000 mt of RBD palm olein in a tender that closed today. Price was reported at $838.50/mt cif.
— Chinese customs data for January pegged Soybean imports for the month at 5.9 mln mt up +23.7% from the year ago month
— Chinese January customs data pegged edible oil imports at 690,000 mt up +2.2% over the year ago month
— Chinese customs data for January shows the country’s trade surplus widened out to $31.9 billion from December’s $25.6 billion, economists had forecast a trade surplus of $27.0 billion
— Traders say markets continue to talk that China is trying to resell 6 to 8 cargos of US Soybeans for Feb/Mar and there is also talk China was able to switch several cargos of US origin Soybeans to Brazil origin.
— China’s Sinopec was granted license to commercially sell aviation biofuel by the country’s civilian aviation administration. The biofuel was developed in-house by Sinopec and has been tested since April 2013.
— EIA short term February energy outlook shows biodiesel production averaged about 87,000 bbl/d in 2013 and is forecast to average 84,000 bbl/d in both 2014 and 2015
— John Deere & Co announced 1Q revenue at $7.65 billion and net income of $681 million
— Andersons reported revenue during the 4Q at $1.58 billion, net income during the quarter was $30.7 million, while the company’s full year revenues were $5.6 billion and $89.9 million in net income for the entire year.
— USDA Economic Research Service forecasts 2014 net farm income at $95.8 billion off -26% from the $130.5 billion in 2013. The 2014 forecast would be the lowest since 2010, but would remain $8 billion above the previous 10-year average.
— USDA 2014 farm income forecast report suggests crop receipts are expected to decrease more than 12% in 2014, led by a projected $11-billion decline in corn receipts and a $6-billion decline in soybean receipts.
— USDA 2014 farm income forecast report estimates total production expenses are forecast to decline $3.9 billion in 2014, which would be only the second time expenses declined in the last 10 years.
— Pending Tender: Vegoil sources say 10,000 mt of optional origin sunseed oil is being sought by Iraq in a tender that closes on Feb 9th
— Pending Tender: Cash grain traders said 3,000 mt of optional origin Soyoil is being sought in a Bangladesh tender to close on Feb 10th
— Pending Tender: Egyptian traders say 40,000 mt of Sunseed oil is being sought by state run FIHC in a tender that closes on Feb 11th.
— Pending Tender: Vegoil traders say 30,000 mt of sunseed oil is being sought in a Feb 13th tender by Egypt’s Meditrade. The vegoil is for shipment LH March to April 4th
— Liffe Paris May rapeseed futures trading up +0.25 euro at 373.75 euros/mt in Wednesday’s trade
— Dalian May corn soybean on Wednesday traded +7 yuan higher at 4,727 yuan/mt; May soymeal futures gained +35 yuan ending the day at 3,421 yuan/mt
— Dalian May vegoil futures on Wednesday traded higher, soyoil futures gained +2 yuan to 6,634 yuan/mt, palm oil futures were up +14 yuan at 5,866 yuan/mt
— Cash sources say Malaysian RBD palm oil and palm olein cash offers for Feb/Mar were up +$2.50 at $817.50/mt
— Malaysian April crude palm oil futures finished Wednesday’s session at 2,635 ringgit/mt, up +1.0% on the day.
— CBOT Soybean Volume & Open Interest for February 11th 2014 was 285,371; Open Interest increased +6,861 to 682,698.
— CBOT Soybean Oil Volume & Open Interest for February 11th 2014 was 126,474; Open Interest decreased -3,590 to 347,407.
— CBOT Soybean Meal Volume & Open Interest for February 11th 2014 was 111,357; Open Interest increased +1,595 to 299,697.
— Weather: 6-10 Day forecast: Above Normal Temps. Above Precip East, Below West
— Outside markets. Crude Oil up +61c @ $100.55; Gold up +$1.80 @ $1291.60 ; Silver up +15.7c @ $20.310 ; US $ index up +20 pts @ 80.91
LaSalle Street News Cash Markets
— CIF Soybeans steady up 5. FH Feb. +95 to +100, Feb. +90 to +90, Mar. +79 to +82, Apr. +85 to +89, May +75 to +82
