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NEAR-TERM MARKET FUNDAMENTALS: Cold and storming weather over the long weekend supported ideas that livestock feed usage is up and ideas that the tail end of harvest has been disrupted for corn and the corn rally helped support the soybean complex overnight. Traders see a bullish macro-economic view for the China economy and a positive world growth view as supportive forces for commodities in general and a weak tone to the US dollar and firm metals market added to the positive tone overnight. South America weather remains mostly a negative factor for the grain markets as Brazil and Argentina look to maintain favorable soil moisture conditions this week with scattered rains. The soybean marked closed lower on Thursday despite continued signs of strong demand from China but the market took out Thursday’s highs in the overnight session. The weekly export sales report showed stronger than expected sales in soybeans and oil and in line with expectations in meal. Net sales for soybeans were 1.369 million tonnes. Cumulative soybean sales stand at 84.3% of the USDA forecast for the entire season as compared with the 5 year average of 60.3%. Net meal sales came in at 254,200 tonnes which pushed cumulative sales to 62.9% of the USDA forecast versus a 5 year average of 41.7%. Net oil sales came in at 46,700 tonnes which pushed cumulative sales to 53.3% of the USDA forecast versus a 5 year average of 31.9%. Traders continue to await a shift in China demand away from US soybeans and toward South America new crop supply soon. Traders also anticipate the US government to extend the bio-diesel blenders tax credit in early 2010 and this has already been priced so anything different would likely impact the market. Traders seem to be raising their estimates for Brazil soybean production by 1-3 million tonnes above the December USDA forecast of a record 63 million tonnes.
TODAY’S GUIDANCE: The market is seeing an oversold technical bounce but the upside seems limited given the hefty supply outlook. March soybean selling resistance 1024 1/2 and more resistance at 1028 with 986 and 982 (50% of Oct-Dec rally) as next objectives. March meal looks to continue to push lower with 289.30 as next downside objective with resistance at 304.40. For traders who want to trade from the long side, March soybean oil support comes in at 38.74 and 38.49 with 39.48 and maybe 39.92 as near-term upside targets.
Soybean Market Commentary – 2009.12.28
by Terry Roggensack on December 28, 2009
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
NEAR-TERM MARKET FUNDAMENTALS: Cold and storming weather over the long weekend supported ideas that livestock feed usage is up and ideas that the tail end of harvest has been disrupted for corn and the corn rally helped support the soybean complex overnight. Traders see a bullish macro-economic view for the China economy and a positive world growth view as supportive forces for commodities in general and a weak tone to the US dollar and firm metals market added to the positive tone overnight. South America weather remains mostly a negative factor for the grain markets as Brazil and Argentina look to maintain favorable soil moisture conditions this week with scattered rains. The soybean marked closed lower on Thursday despite continued signs of strong demand from China but the market took out Thursday’s highs in the overnight session. The weekly export sales report showed stronger than expected sales in soybeans and oil and in line with expectations in meal. Net sales for soybeans were 1.369 million tonnes. Cumulative soybean sales stand at 84.3% of the USDA forecast for the entire season as compared with the 5 year average of 60.3%. Net meal sales came in at 254,200 tonnes which pushed cumulative sales to 62.9% of the USDA forecast versus a 5 year average of 41.7%. Net oil sales came in at 46,700 tonnes which pushed cumulative sales to 53.3% of the USDA forecast versus a 5 year average of 31.9%. Traders continue to await a shift in China demand away from US soybeans and toward South America new crop supply soon. Traders also anticipate the US government to extend the bio-diesel blenders tax credit in early 2010 and this has already been priced so anything different would likely impact the market. Traders seem to be raising their estimates for Brazil soybean production by 1-3 million tonnes above the December USDA forecast of a record 63 million tonnes.
TODAY’S GUIDANCE: The market is seeing an oversold technical bounce but the upside seems limited given the hefty supply outlook. March soybean selling resistance 1024 1/2 and more resistance at 1028 with 986 and 982 (50% of Oct-Dec rally) as next objectives. March meal looks to continue to push lower with 289.30 as next downside objective with resistance at 304.40. For traders who want to trade from the long side, March soybean oil support comes in at 38.74 and 38.49 with 39.48 and maybe 39.92 as near-term upside targets.
Tags: Beanoil, Grains, Soybeans, Soymeal
About Terry Roggensack