Soymeal Prices Seen as Undervalued Amid Elevated Grain Markets

Grain prices are currently elevated due to several factors, including high corn, wheat, and soybean prices. In this environment, soymeal is considered too cheap by Sean Lusk, Vice President of Commercial Hedging Division at Walsh Trading. He believes that end-users will extend feed coverage ahead of winter, which can come in the form of meal purchases.

Lusk points out that China has made a significant purchase of soybeans overnight, buying over 700,000 metric tons with another 720,000 metric tons going to unknown destinations. This sale is the largest in over a year and aligns with China's necessary average purchase rate to hit its 25 million metric ton promise by the end of the 26/27 marketing year.

Lusk suggests that a rally will take soymeal prices to at least the .382 retracement at $361 or potentially the 50% retracement at $389. He has offered a conservative trade idea, which involves buying the March 2027, 360/410 call spread for 5 points or $500 plus trade costs and fees.