The soybean market continues to keep traders on their toes as we traded a 24 cent range yesterday.
Early in the session it looked like the bears were in control as the technical support level at 1020 was taken out. This was after the night traders tried and failed to take out the 100 moving average in the overnight session. A bigger-than-expected National Oilseed Processors Aassociation crush number gave the bull’s control of the market late in the day as the futures rallied and took out the 100 day moving average.
The NOPA crush number came in at 157.96 mb. The trade had estimated that the monthly crush would come in at 150.781 million bushels. The October crush was the biggest crush on record, so much for the story line that crushers were having a hard time getting their hands on beans to crush. When you take a step back it makes sense that the crush was at a record profit as margins have been phenomenal. After the record low September crush the pipeline was empty and it looks like the crush industry was doing all they could to fill it up over the past few weeks. The October crush ended up being 1% above October of 2013. The USDA is projecting a 2.7% increase in the amount of beans that will be crushed this year. We will need to average 3.9% increase from November through August to meet the U.S. Department of Agriculture goal.
We do anticipate that with the record amount of beans available hitting the USDA crush target should be achievable. In addition to the NOPA numbers the weekly bean inspections were considered bullish. The US shipped out 3.1 million tonnes (114 million bushels) which is a record amount of beans shipped in one week. Seasonally this is the time of year that bean shipments top out so we would look for bushels being shipped out to drop off substantially over the next few weeks.
After virtually shipping no beans in the early part of harvest the exporter has been very aggressive over the past 5 weeks. They have now pretty much caught up to where they normally are for this time of year. Allendale continues to view the current price of beans overvalued. We recommend producers use this rally to sell cash grain or at least buy puts to protect unpriced grain. Our price models put the economic value of beans at $9.35 the question is how fast the market will reach our target.