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NEAR-TERM MARKET FUNDAMENTALS: Trade reaction to the State of the Union address was somewhat positive for financial markets, and grain traders saw some relief from the bearish outside market forces overnight. However, there is still significant concern that the bank regulation reforms could in the long run spark increased volatility in the futures markets. Ideas that the market is in a short-term oversold condition and that reforms will not occur for months or longer have helped to provide some support. There are unverified rumors that China has switched two cargoes of US soybeans to South American origin and that there is one US cargo of soybeans under quarantine in China for quality concerns. On top of fears that bank trading restrictions could lead to futures volatility, China traders are concerned that the tightening credit situation there could lead to a near term slowdown in commodity demand and at least temporary pressure on many commodity markets. A strong US dollar, a weak Brazilian currency and talk of hedge funds shifting from a net long to a net short position in soybeans are factors which have helped to pressure the market. Argentina crushed 1.5 million tonnes of soybeans in December, compared with 2.26 million tonnes in November and 2.37 million in December 2008. March soybeans fell to their lowest level since October 8th yesterday with good volume noted. Growing conditions continue to be very favorable in Brazil with forecasts calling for an improvement over current hot and dry conditions in Argentina by the end of next week. Brazil is expecting scattered rains over the next several days, while Argentina may start getting scattered rains on Saturday and again to start next week. Indications of cooler and wetter weather in Argentina for later next week could ease stress concerns. The Census Bureau will issue its latest monthly crush data this morning. Traders are looking for the crush rate to be nearly 173 million bushels for December. Export sales will also be released this morning with expectations currently ranging up to 900,000 tonnes for soybeans, up to 300,000 tonnes for meal and 5,000 to 20,000 tonnes in soy oil. The outlook for surging soybean stocks for the coming year as record crops from the US, Brazil and Argentina move in to saturate demand has helped shift the psychology in the soybean complex.
TODAY’S GUIDANCE: Eventually, the market looks to end up with too much meal and a tightening supply of world vegetable oils. The market is in a short-term oversold condition, but rallies still look like selling opportunities. Selling resistance for May soybeans comes in at the 949 3/4 and 960 3/4 with 932 3/4 and 904 1/2 as next downside objectives. November soybean selling resistance is at 936 3/4 with 909 1/4 as next downside objective.
Soybean Market Commentary – 2010.01.28
by Terry Roggensack on January 28, 2010
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: Trade reaction to the State of the Union address was somewhat positive for financial markets, and grain traders saw some relief from the bearish outside market forces overnight. However, there is still significant concern that the bank regulation reforms could in the long run spark increased volatility in the futures markets. Ideas that the market is in a short-term oversold condition and that reforms will not occur for months or longer have helped to provide some support. There are unverified rumors that China has switched two cargoes of US soybeans to South American origin and that there is one US cargo of soybeans under quarantine in China for quality concerns. On top of fears that bank trading restrictions could lead to futures volatility, China traders are concerned that the tightening credit situation there could lead to a near term slowdown in commodity demand and at least temporary pressure on many commodity markets. A strong US dollar, a weak Brazilian currency and talk of hedge funds shifting from a net long to a net short position in soybeans are factors which have helped to pressure the market. Argentina crushed 1.5 million tonnes of soybeans in December, compared with 2.26 million tonnes in November and 2.37 million in December 2008. March soybeans fell to their lowest level since October 8th yesterday with good volume noted. Growing conditions continue to be very favorable in Brazil with forecasts calling for an improvement over current hot and dry conditions in Argentina by the end of next week. Brazil is expecting scattered rains over the next several days, while Argentina may start getting scattered rains on Saturday and again to start next week. Indications of cooler and wetter weather in Argentina for later next week could ease stress concerns. The Census Bureau will issue its latest monthly crush data this morning. Traders are looking for the crush rate to be nearly 173 million bushels for December. Export sales will also be released this morning with expectations currently ranging up to 900,000 tonnes for soybeans, up to 300,000 tonnes for meal and 5,000 to 20,000 tonnes in soy oil. The outlook for surging soybean stocks for the coming year as record crops from the US, Brazil and Argentina move in to saturate demand has helped shift the psychology in the soybean complex.
TODAY’S GUIDANCE: Eventually, the market looks to end up with too much meal and a tightening supply of world vegetable oils. The market is in a short-term oversold condition, but rallies still look like selling opportunities. Selling resistance for May soybeans comes in at the 949 3/4 and 960 3/4 with 932 3/4 and 904 1/2 as next downside objectives. November soybean selling resistance is at 936 3/4 with 909 1/4 as next downside objective.
Tags: Grains, Soybean Oil, Soybeans, Soymeal
About Terry Roggensack