- Today has seen the grains making gains and the soybean complex shedding value ahead of the US Thanksgiving holiday shutdown. Trade has been active ahead of the Friday December first notice day and the holiday weekend has created active rolling of positions to deferred contract months. Interestingly we have seen the Dec/Jan soybean meal spread push wider to a new high of $24.00 Dec premium, which is doubtless causing someone some pain. The last high was set in October and today’s new high created a flurry of activity, which when added to EU and US meal shorts being forced (as December looms large) to close Dec positions in the thin pre-holiday market, pushed front month values even higher. The high values may well incentivise crushers to tender meal onto the futures market at a record and somewhat surprising market high.
- The announcement of a further sale by US exporters of soybeans (120,000 mt) to China came as something of a surprise. However, unpicking the details suggest that it was traded on a basis and could well be switched to S America if the March cash basis permits, and it seems almost inevitable (at this time) that it will. The large volume of soybeans already shipped and en route to China as their crush margins ease back also points to softening import demand into the New Year.
- Nearer to home, the EU’s proposed €315 billion investment package, aimed at boosting the flagging economy, pushed equity markets modestly higher.The US$ also rallied as the market viewed the package proposal as being “too little, too late”. Crude oil also eased further to fresh lows ahead of the upcoming OPEC meeting.
- Soc Gen, in a widely distributed forecast has stated its bearish outlook for soybeans with a price forecast for the Jul/Sep quarter dropping to $9.49/bu, more than $1.00 lower than current values. They added that the near term faced the challenge of a drop off in export demand for soybean meal, which has latterly been the price prop for markets. Sales pace was noted to have eased back from its early rapid level as new crop soybean supplies reached the market. Their view on S American output was interesting insofar as they saw it “mixed” with an El Niño pattern potentially leaving N Brazil with dry conditions, and S Brazil to C Argentina wetter than average. If output came in at expectation they suggested that it would herald a further downtrend in already reduced prices in the second half of 2015 in an overall picture of more than adequate global stocks.