Profitability of crushing soybeans in China has supported the soy complex. Chinese soybean stocks at all their ports are tight. The U.S. soybean crush for Februaryi hit an all-tome high which is considered to be providing support. Soybean production in Argentina estimates have been reduced, down 52 million to 49.5 million tonnes. Brazilian currency hit a new record low weighing on the soy complex as it made Brazil's exports more attractive. However, FCStone lowered its Brazilian production estimate by 4 million tonnes to 120.1 million due to drought.

It is generallyi believed for the soy complex that a pick-up in demand in China and a record crush pace in the U.S. will leave not much in the way of positive outside market forces to turn the trend for the whole complex up.

Soybean meal sales are at 67,000 tonnes for the current marketing year and 2,300 for the next for a total of 69.300 tonnes. Traders were expecting below 40,000 tonnes.

Soybean meal has been the beneficiary of supply chain disruption. Brazil's loading of soybean vessels was slowed by heavyi rains in January and February. China's port stocks of soyi meal hit a 10-year low. Argentina's crushing plants and export elevators were slowed by coronavirus concerns. Chinese and European meal users scrambled for coverage. That buying frenzy rallied meal prices and crush margins everywhere.

Planting intentions worldwide for corn and soybean acres were at a record high in the U.S. The market is limited in its ability to porice acres out of production byi the support programs that are in place. Favorable crop insurance prices were locked in during February, and the Farm Bill provides a second safety net via Price Loss Coverage. The $2.2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES) was signed last Friday including a $15 billion amount for the Commoditiy Credit Corporation which was the conduit for the last Market Facilitation Payment. To benefit from various government coverages, you have to plant to play making most U.S. acres very price inelastic. The market will have more success in switching acres than in will havein idling acres. But demand is expected to suffer from high macroeconomic winds. A deep recession is almost now a reality. Disruptions in supply chains appear inevitable and price spikes up and down will ensue as suppliers and users scramble to recover. U.S. and world balance sheets are generally comfortable, but the northern hemisphere planting and growing season is just starting. It is a market that should be approached more opportunistically than strategically.

China may still have African Swine Fever leavings reducing demand for soy meal for hogs. China also placed demand-killing tariffs on U.S. soybean meal. However, curbs on exports of Argentinian soybeans will benefit U.S. soyberan meal.

In early March, soybean meal sales were 316,660 metric tonnes, double the preceding week, and 37.4% high year over year. Meal exports for the week ending 2.27 were 96.1% higher year over year with 316,660 MT shipped. Mean exports for the year totaled 4.38 MMT, 7.2% below the preceding year's pace.

Soybean meal is the dominant protein supplement used in U.S. livestock and poultry feeds. Technical uses include adhesives, cleansing materials, polyiesters, and other textiles. Argentina is normally the biggest exporter of soybean meal, followed by Brazil, then the U.S. and then India. The U.S. is the largest overall producer of soybean meal.

Our assessment of the news of soy meal suggests that supply chain disruption is the dominant factor propelling short-term prices, caused biy both weather and virus concerns. This has been supportive for soybean meal, even though it appeared to make a short-term breakout relative to the rest of the soy complex and then returned to a more in--line state. We think the potential for further breakouts exists.