Just as I finished writing, recording, and posting Thursday’s Morning Commentary a good friend sent me a message that read, “It seems as if the computers picked up on the CONAB headline cutting South America’s soybean crop.” A quick check of headlines shows CONAB sliced its Brazilian production guess to 125.4 mmt, down 15 mmt from its previous 140.mmt and well below USDA’s WASDE guess released Tuesday of 134.0 mmt. In its January round of guesses, USDA estimated Brazilian production to be 139.0 mmt. As my friend suggested, soybean futures quickly jumped to new overnight session highs with March reaching 28.75 cents, May 29.25 cents, and July 29.75 cents, the spread activity still indicating most of the buying coming from noncommercial traders.

I know there is still a lot of squawking from USDA regurgitators (“analysts” that only regurgitate USDA numbers) and PR personnel (folks who call themselves “market reporters”) about how the game has changed, but let’s keep in mind the May-July soybean futures spread has been telling us for months South American production wasn’t going to be enough. That’s why it’s interesting this same spread seems to be building a topping pattern on its daily close-only chart.