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NEAR-TERM MARKET FUNDAMENTALS: A strong US dollar, a continued shift in the demand for soybeans from China to South America and ideas that cash markets will weaken as the South American harvest progresses helped to pressure the market overnight. Talk of a wet spring and seasonal buying from speculators plus end-of-month buying helped support the market last week. China’s Ministry of Commerce cut their forecast for February imports to 3.32 million tonnes, down 18% and also lowered their forecast for March imports to 3.32 million tonnes, down 14% from last year. Argentina soybean prices at Rosario, Argentina closed at an 11-month low of $224/tonne. For May delivery, prices are at $218/tonne. The Commitments of Traders Futures and Options report as of February 23rd for Soybeans showed non-commercial traders were net long 19,179 contracts, an increase of 5,456 contracts. In the CIT Supplement report, commodity index traders held a net long position of 169,966 contracts, down 1,434 contracts for the week. In oil, non-commercial traders were net long 19,122 contracts, an increase of 1,664 contracts. Commodity index traders held a net long position of 97,758 contracts, up 3,954 contracts for the week. For the 12 agricultural markets covered in the supplemental report, index funds were the strongest buyers of oil. For meal, non-commercial and non-reportable combined traders held a net long position of 35,627 contracts, up 6,288 contracts in the net long position for the week. Aggressive fund buying in soybeans and oil and a more positive tone for outside markets helped support solid gains on Friday. Traders said that a lower dollar and sharply higher crude oil helped to boost the soybean complex. Funds were also consistent buyers over the course of the day with talk of a wet spring and ideas that the market is a bit oversold helping to support. Weather has been dry in Argentina at the end of the week last week and into today but there could be some scattered rains for Tuesday through Thursday this week before warm and dry conditions return on the weekend. This appears to be near ideal for Argentina crops drying out from late February hefty rains. Brazil is seeing unwelcome rains stretching from the south central growing state of Parana up into Mato Grosso which may keep harvest slow. The USDA announced a sale of 113,000 tonnes of soybeans to China on Friday but delivery is 2010/11 season. Taiwan is tendering to buy 40,000-60,000 tonnes of US or Brazil soybeans this week. Argentina appears set to begin blending 5% bio-diesel with diesel. Argentina produced 1.2 million tonnes of bio-diesel in 2009 which was exported and the industry is expected to produce near 1.6-2.2 million tonnes for the coming season.
TODAY’S GUIDANCE: Corn may see a boost from wet weather this spring but it is a tough case to support soybeans as late plantings would boost soybean acres. We remain bearish and believe bounces are still selling opportunities. Selling resistance for July soybeans is at 972 1/2 with 946 3/4 as light support and 893 as downside objective. Use 881 3/4 as next downside objective for November soybeans with 942 resistance.
Soybean Market Commentary – 2010.03.01
by Terry Roggensack on March 1, 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: A strong US dollar, a continued shift in the demand for soybeans from China to South America and ideas that cash markets will weaken as the South American harvest progresses helped to pressure the market overnight. Talk of a wet spring and seasonal buying from speculators plus end-of-month buying helped support the market last week. China’s Ministry of Commerce cut their forecast for February imports to 3.32 million tonnes, down 18% and also lowered their forecast for March imports to 3.32 million tonnes, down 14% from last year. Argentina soybean prices at Rosario, Argentina closed at an 11-month low of $224/tonne. For May delivery, prices are at $218/tonne. The Commitments of Traders Futures and Options report as of February 23rd for Soybeans showed non-commercial traders were net long 19,179 contracts, an increase of 5,456 contracts. In the CIT Supplement report, commodity index traders held a net long position of 169,966 contracts, down 1,434 contracts for the week. In oil, non-commercial traders were net long 19,122 contracts, an increase of 1,664 contracts. Commodity index traders held a net long position of 97,758 contracts, up 3,954 contracts for the week. For the 12 agricultural markets covered in the supplemental report, index funds were the strongest buyers of oil. For meal, non-commercial and non-reportable combined traders held a net long position of 35,627 contracts, up 6,288 contracts in the net long position for the week. Aggressive fund buying in soybeans and oil and a more positive tone for outside markets helped support solid gains on Friday. Traders said that a lower dollar and sharply higher crude oil helped to boost the soybean complex. Funds were also consistent buyers over the course of the day with talk of a wet spring and ideas that the market is a bit oversold helping to support. Weather has been dry in Argentina at the end of the week last week and into today but there could be some scattered rains for Tuesday through Thursday this week before warm and dry conditions return on the weekend. This appears to be near ideal for Argentina crops drying out from late February hefty rains. Brazil is seeing unwelcome rains stretching from the south central growing state of Parana up into Mato Grosso which may keep harvest slow. The USDA announced a sale of 113,000 tonnes of soybeans to China on Friday but delivery is 2010/11 season. Taiwan is tendering to buy 40,000-60,000 tonnes of US or Brazil soybeans this week. Argentina appears set to begin blending 5% bio-diesel with diesel. Argentina produced 1.2 million tonnes of bio-diesel in 2009 which was exported and the industry is expected to produce near 1.6-2.2 million tonnes for the coming season.
TODAY’S GUIDANCE: Corn may see a boost from wet weather this spring but it is a tough case to support soybeans as late plantings would boost soybean acres. We remain bearish and believe bounces are still selling opportunities. Selling resistance for July soybeans is at 972 1/2 with 946 3/4 as light support and 893 as downside objective. Use 881 3/4 as next downside objective for November soybeans with 942 resistance.
Tags: Grains, Soybeans
About Terry Roggensack