Argentine strike drives soybeans higher
Soybeans caught a bid today as the market erased pretty much all of Friday’s sell-off.
The soy oil market technically broke out to the upside today and that helped propel the beans higher. Talk was that Sino Grain out of China was buying Argentina soy oil and this helped push the oil market higher. In addition to the soy oil run up, news wires were carrying stories that port workers in Argentina were threatening to launch a strike today and this helped fuel today’s gains in the beans.
On Friday the market came under pressure on reports that the strike threatened earlier in the week was not going to happen. I guess it only makes sense that the market would erase Friday's losses that were fueled by the no strike talk now that the strike talk is back on the table. Either way, strikes this time of year are very common. With inflation running at 40% workers use the threat of a port shutdown during the glut of harvest to force wages higher. Strikes in Argentina tend to end fast as the government cannot stand to see the ports closed. Export sales taxes are the government's second highest form a revenue generation so they will intervene to keep the tax revenue flowing.
Today’s weekly inspections came in at 6.3 million bushel and were the second lowest of the marketing year. It was within the trade's estimated range on 4.0 to 11.0 million bushels. We need to ship out an average 5.6 million bushels of beans a week to meet the USDA’s sales target of 1.790 billion bushels. Planting progress released after the close showed that 13% of the crop has been planted. This was above the trade’s guess of 11% and way above the 5-year average of 9%.
Friday's CFTC reports showed that trading funds continue to liquidate their short bean positions. There were net buyers of 15,472 contracts and now are short 32,033 contracts. They maxed out their short position at a record 81,716 contracts two weeks ago.
Bird flu continues to expand with reports that up to 20 million birds have been affected, making this the worse U.S. bird flu outbreak on record. The governor of Iowa declared a state of emergency due to the outbreak over the weekend. Time will tell if this week will trade out like last week when we saw early market strength that was all given back by the end of the week.
Today’s planting number saw soybeans at 13% planted. Allendale continues to have a long-term bearish view of the market, but for the time being it looks like the market might just hop around until it get a better handle of how planting of this year's crop goes. We still encourage producers to use rallies as selling opportunities as we are still targeting the low “8” for the fall low.