Soybean and meal futures continued higher through Tuesday as funds continued to cover their short soybean position and add to their long meal position. The Argentine forecast offered hardly any changes, with very little rain and well above normal temperatures lasting into mid February. Commodity fund traders were estimated buyers of 11,000 soybean, 5,500 soymeal, and 3,000 soyoil contracts.
The EIA will release the January Biodiesel Production report on Wednesday, with data for November. Total soyoil use and substitution of other products will be just as important as the actual biodiesel numbers. Corn oil prices have been in decline for over a year, as most ethanol plants have invested in technology and equipment to extract oil from DG’s. Biodiesel plants prefer soyoil, but have been steadily increased use of alternatives, including corn oil in the last year as the corn/soy spread has slipped to a 3 year low.
Spot futures close through the 1st of several a major weekly trend lines on Thursday, and without a change in the Argentine forecast, we expect that breaks continue to find demand from short funds and end users.
