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NEAR-TERM MARKET FUNDAMENTALS: Drier weather moved across the Midwest over the weekend as was predicted late last week. Forecasters indicate that this should be followed by a mostly dry spell in the wettest areas of the central, southern and SE Midwest into Thursday along with warmer temperatures during mid week. Traders indicate that this is helping to pressure the soybean and meal markets to start the week following last week’s gains. While drier weather alleviates traders’ concerns that corn acreage will be shifted into soybeans if corn planting delays continue, one analyst noted that planting delays are mainly supportive to both markets over the long term. He added that accelerated planting progress with good soil moisture is mainly negative to prices over the longer term as was the case last year after the corn and soybean crops finally got planted. Traders also indicate that modest selling by index funds last week may be adding to the negative sentiment this morning. The Commitments of Traders Report for the week ending 5/12 showed net selling by index funds, but continued net buying by trend-following funds. Index funds were net sellers of 3,299 contracts in soybeans and 1,938 in oil. However, trend-followers were net buyers of 6,476 contracts in soybeans and 8,804 contracts in oil. In meal, large non-commercial traders were net sellers of 2,572. (There is no breakout for index and non-index funds in meal.) Traders will be looking at China again this week for indications as to whether that country will continue to reduce their buying in soybeans due to a growing surplus of domestically-produced meal there. There were reports last week that meal exports by China for early May were up sharply to over 80,000 tonnes to SE Asia due to that domestic surplus. A state-owned entity in Egypt is looking to buy 20,000 tonnes of soy oil and 20,000 tonnes of sunflower oil. The USDA will issue its latest Crop Progress Reports this afternoon and traders are looking for modest progress in soybean planting from Illinois through Indiana and into Ohio.
CASH NEWS AND TENDERS: A state-owned entity in Egypt is looking to buy 20,000 tonnes of soy oil and 20,000 tonnes of sunflower oil.
WEATHER: The latest rainy pattern exited the eastern Midwest on Sunday after dry weather started spreading into the corn and soybean belts from the NW along with the cold temperatures. This system produced frosts starting in the NW Midwest into Saturday morning, moving into the north central Midwest into Sunday morning and the parts of the extreme NE into this morning. Warmer temperatures are forecast by Tuesday with a significant push of warmer air by Wednesday. This is expected to last through Thursday, but some weather models switched over to a much wetter pattern for the Memorial Day weekend and into the last days of May. In addition, we may see a line of rain showers in The NW Midwest tomorrow and again on Thursday. A look at the 7-8 day record of rainfall shows substantial rains in SE Iowa, northern Missouri and much of Illinois and Indiana as well as southern Oklahoma and SW and southern Arkansas.
TODAY’S GUIDANCE: Soybeans made new highs for the move on Friday followed by a lower close, and this may have set the tone to start the current week. Dry and warmer weather this week should allow rapid planting progress in some areas and while this would seem to indicate fewer soybean acres, there are a number of very wet areas in Missouri, Illinois and Indiana that will not be drying out this week. That means that there is still a chance of some additional acreage shifting into soybeans if rains return over the Memorial Day weekend as some forecasters predict. Despite the overnight weakness, we are looking for the support above $11 in the July contract to hold, at least on the first test. First support is at 1102 to 1103 1/2 in the July contract with the next support at 1076 and 1064 1/2. First resistance is at 1141 with added resistance at 1168.
