US Soyoil Stocks, Yield (NOPA)

Cents
Closing Grain & Soybean Comments
November 17th, 2014
Soybeans: The soybeans rode a rash of supportive fundamental news to a higher close, finishing up 12-14 cents on
the day. The Jan settled at $10.36 ¼, up 13 ¾ cents after trading as much as 8 cents weaker in the overnight
hours. The Nov ’15 was up 10 ½ cents to settle at $10.25. Bigger than expected figures from the USDA (export
inspections) and NOPA (October crush) were supportive to the soybean complex. Even with the notably higher trade,
the Jan beans barely got back to the middle of last Friday’s range. The soybean spreads also did not lend much
credence to the higher flat price action. The Jan-March was unchanged at 7 ¾ cents carry.
12.0
11.9
11.8
11.7
11.6
11.5
11.4
11.3
11.2
11.1
2.00
1.50
1.00
0.50
140
120
100
80
60
40
20
0
Oct-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
Stocks-IA/IL
Aug-14
Stocks-Rest of US
Aug-13
Jun-13
Apr-13
Feb-13
Dec-12
0.00
Oct-12
Oil Stocks-Billion Lbs
2.50
Oil Yield
Weekly Soybean Export Shipments vs.
Seasonally-Adjusted Projected Pace
'14/15
Projected
9/4
9/11
9/18
9/25
10/2
10/9
10/16
10/23
10/30
11/6
11/13
11/20
11/27
12/4
12/11
12/18
12/25
1/1
Even before the bullish NOPA report, the market
had received friendly news on the export front.
The USDA announced the sale of 111K tons of
soybeans to China (51K were switched from
unknown). They followed that up by reporting last
week’s soybean export inspections were record
large 114.5 million bushels. The prior record of
102.0 million was scored just two weeks ago. The
chart at the right shows by just how much weekly
inspections have exceeded the seasonal pace
implied by the USDA’s 1.72 billion bu export
demand projection. Nearly 79% of this week’s
loading are destined for Mainland China.
US Soyoil Stocks, Yield (NOPA)
3.00
million bushels
Soybean crushings in the month of October by
NOPA members was 158.0 million bushels, towards
the upper end of expectations. That figure was
also well above a month ago (100.0 million) and
slightly above a year ago (157.1 million). In fact, it
was record large crush for October. Even with the
large crushings, oil stocks rose only slightly from
the very low month ago level to 966 million lbs.
The combined oil stocks in IA/IL are lower than last
month and the lowest in recent history. The
disappointing oil stocks stemmed from the lowest
yield (11.42 lbs per bu) in any month since
November of 2011.
Lbs Per Bu
Soybean meal was the better performer of the products, reversing overnight losses to finish $3-$8 per ton higher with
the Dec at $387.10. Oil was up just 25 points despite a NOPA oil stocks number that was quite friendly. That left the
Dec at 32.61.
In other news: The wires are reporting that 25K
tons of German rapeseed meal has been traded
into the West Coast of the US. This follows reports
last week that up to 4 cargoes of Argentine meal had traded into the SE US. The trade was looking for US soybean
harvest to be 95% complete as of November 16th. It was reported at 94%. The funds were buyers of 7,000 beans,
3,000 meal, and 1,000 oil on the day. Two separate incidents of bird flu were seen in Europe over the weekend, one
in the Netherlands and one in the UK. They follow an incident in Germany last month.
Brazilian growing areas received rain over the weekend and are generally seen as being in pretty good shape.
Argentine growing areas have seen drier weather over the past 10-14 days. Dry soil conditions are not currently a
concern and there is rain in the forecast towards the end of this week and next week. However, if those rains fail to
materialize, the weather bulls will climb up on their recently-underutilized soapboxes.
Gulf soybean bids were holding flat at +100 F after falling out of bed last week. Midwest soybean basis was mixed
on Friday. Locations tributary to the river were weaker following the gulf. Some of the more “interior” soy
processors firmed, however. Meal offers held flat.
RJO’Brien
Service is our trade
1|Page
Finally, Dave Toth offered this technical synopsis of the January soybeans…”Fri's shorter-term momentum failure
defined 13-Nov's 10.73 high as the…new short-term risk parameter, a failure below 05-Nov's next larger-degree
corrective low and our longer-term risk parameter at 9.97 remains required to confirm a bearish divergence…needed
to break Oct-Nov's uptrend. In effect we believe the market has defined 10.73 and 9.97 as the key directional
triggers heading forward.”
Inside of that $9.97-$10.73 range, beans have been incredibly choppy with the bears touting big supplies and the
bulls touting big demand.
Corn: Grains lacked the fundamental firepower of the soybean complex and were weighed down by another strong
performance by the US dollar. Corn traded lower for the entirety of the “day session” and finished 2-4 cents weaker.
The nearby December contract dropped the hardest, down 4 ¼ cents to settle at $3.77 ½. The Dec ’15 contract was
down 2 ½ cents on the day to $4.21 ½. Obviously the corn spreads were weaker on the day after firming up over
the 2nd half of last week.
50
million bushels
Weekly Corn Export Shipments vs. SeasonallyAdjusted Projected Pace
'14/15
Projected
40
30
20
10
0
9/5
9/12
9/19
9/26
10/3
10/10
10/17
10/24
10/31
11/7
11/14
11/21
11/28
12/5
12/12
12/19
12/26
1/2
Weekly corn inspections were disappointing at 15.8
million bushels. The chart at the right shows how
corn inspections have been below the seasonal
pace implied by the USDA’s 1.75 billion bu export
estimate for 5 straight weeks. The last three have
been particularly poor. At least some of the
slowness should be attributed to the record
soybean loadings seen in the same time. There is
simply only so much capacity at US ports. Still,
corn exports have some catching up to do after a
poor start to the marketing year.
Other news was scarce. The US was expected to
be 87% done on corn harvest as of 11/16. The
actual number came in at 89%, even ahead of the
5 year average pace. Cold and dry weather in the US should allow for harvest completion. Israel tendered for 170K
tons of corn and 25K tons of feed wheat, both optional-origin. Their recent grain purchases have come off the Black
Sea. China and Australia signed a free trade agreement that will over time eliminate tariffs on Aussie dairy and beef
imports. Tyson forecasted better than expected 2015 profits, supported by high beef prices and their recent
acquisition of the Hillshire brand.
Like the soybeans, gulf corn bids fell notably over the 2nd half of last week but seemed to stabilize this morning
around +77 Z. Midwest corn basis on Friday was a mixed bag with river markets and destination markets tending to
soften their bids while ethanol plants (especially in the Western Corn Belt) firmed theirs.
The funds sold 7,000 contracts of corn. Look for corn to find initial support and resistance at 5 cents lower and 5
cents higher during the overnight session.
Wheat: The wheat suffered worse losses
than the corn. SRW and HRW futures
were down 7-9 cents while HRS futures
were down 4-6 cents. The losses followed
five days of higher trade as cold
temperatures became an increasing
concern both in the US and FSU. The Dec
futures settled at $5.51 ¾ on the SRW,
$5.83 ½ on the HRS, and $5.96 ½ on the
HRW. The wheat spreads showed a softer
tone (particularly the HRW spreads).
Daily Q.DXY
6/17/2014 - 11/20/2014 (NYC)
Price
87.921
USD
US Dollar Index
87
86
85
84
83
82
US winter wheat conditions were
unchanged in the last week. The trade
had been looking for a slight decline.
81
80
Like corn, wheat export inspections have
01
16
01
18
01
16
01
16
03
17
been limited in recent weeks by the huge
Jul 14
Aug 14
Sep 14
Oct 14
Nov 14
soybean inspections. Last week’s figure
was just 5.1 million bushels, well below the 18 million bu weekly pace “needed” to reach the USDA’s export
RJO’Brien
Service is our trade
2|Page
projection. On the bright side, Taiwan did tender to buy 82K tons of US wheat.
Ukraine’s government said winter wheat plantings were larger than expected at 15.4 million acres. The “extra” acres
could help offset some of the cold temperature risk that exists on many acres which were planted later than is ideal.
Wheat prices in Ukraine and Russia firmed in the last week.
The funds sold 4,000 contracts of SRW futures. Look for initial support tonight in WZ4 at 5.45, in KWZ4 at 5.86.
THOMAS MEIEROTTO
Commodity Risk Manager
[email protected]
d (515) 221-3818 // m (312) 320-2721 // tf (800) 283-5132 // f (515) 221-9559
RJO 'Brien
939 Office Park Road, Suite 225
West Des Moines, IA 50265
www.rjobrien.com
This material has been prepared by a sales or trading employee or agent of R.J. O’Brien and is, or is in the nature of, a solicitation. This
material is not a research report prepared by R.J. O’Brien’s Research Department. By accepting this communication, you agree that you are an
experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on
this communication in making trading decisions.
DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS
COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR
RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS
ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS
COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.
The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable
investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading
advice is based on information taken from trades and statistical services and other sources that R.J. O’Brien believes are reliable. We do not
guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment
at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.
RJO’Brien
Service is our trade
3|Page
`