US soybeans continue narrow-range oscillation, planting weather in the north improves
Yesterday's daytime moves in meals and oils were baffling, especially since meals rose on position reduction in the morning and then fell back, but after the close we saw Xinhu's positions plunge sharply - it turned out to be short sellers who had been wrong all year getting stopped out. So with US soybeans falling last night on improved weather, soybean meal basically has little room to rise at this level.
US soybean planting progress released in the early hours of today was 96%, versus the five-year average of 93%. The soybean emergence rate was 89%, versus the five-year average of 84%; the soybean good-to-excellent rating has begun to gradually improve. But the regions with the current crop good-to-excellent ratings are Iowa, Ohio and North Dakota. Therefore, later on we still need to watch soybean planting conditions in the north and the Midwest. With large-scale precipitation appearing yesterday in Michigan, Ohio and the Delta region, the market found that soil moisture improved, and driven by this, US soybeans fell back quite a bit before last night's close.
We expect temperatures to return to normal over the next 5 days, with precipitation continuing in the Midwest, especially in northern Iowa, which will also see rain. The only thing to worry about is still North Dakota, where the drought has eased somewhat with light scattered rain, but there is still a chance of drought developing. At present the market is divided on the weather: some believe soil moisture is very low across most of the Midwest and the north, causing the good-to-excellent rating to be far below the same period last year, and last week's data did indeed show low subsoil moisture in the north and Midwest after continuous dryness. So in the short term the market believes that without sustained rainfall, it is uncertain whether the US soybean drought can fundamentally improve and thereby lift the good-to-excellent rating. This is also the fundamental reason why the current decline in US soybeans is not smooth. But with the weather now starting to improve and the good-to-excellent rating also starting to recover, the market will ultimately give a direction.
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