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NEAR-TERM MARKET FUNDAMENTALS: Weakness in outside market forces and concerns over the global economy if Europe struggles to recover from the debt crises sparked additional long liquidation selling pressures to grain markets overnight. Ideas that warmer weather and signs of some dryness ahead should help boost crop development was seen as a negative force on Friday and again overnight. China’s ministry of Commerce raised their estimate for China soybean imports in May to 4.79 million tonnes, up 36% from last year and up from 4.69 million as a previous forecast. Traders believe the increase is due to recent actions to slow imports of oil from Argentina which could boost the China crush pace. Sharp gains in the dollar and sharp losses in most other markets were credited with keeping a lid on soybean prices throughout the session on Friday. The dollar is again attracting flight-to-quality buying which we have seen at various points during the Euro-zone debt crisis. The National Oilseed Processors Association released its crush estimate for April on Friday morning and came in at 131.7 million bushels, about 5 million bushels below trade expectations, and this weak demand data added to the negative tone in the complex. The April crush rate is down from 149.627 in March and 134.115 in April, 2009. Soybean oil stocks were pegged at 2.811 billion pounds, up from 2.738 billion in March and 2.709 in April, 2009. The Commitments of Traders Futures and Options report as of May 11th for soybeans showed non-commercial traders were net long 39,782 contracts, a decrease of 27,644 contracts. This is an aggressive long liquidation pace for the week. The CIT Supplement showed Commodity Index traders held a net long position of 173,495 contracts, down 2,808 contracts for the week. In the disaggregated report, Managed Money traders reduced their net long position by a whopping 33,833 contracts for the week to hold a net long of 43,340 contracts. The selling trend from large traders is seen as a short-term negative force. In meal, non-commercial traders were net long 33,760 contracts, a decrease of 6,893 contracts. Non-commercial and non-reportable combined traders held a net long position of 44,833 contracts. This represents a decrease of 7,362 contracts in the net long position held by these traders. For soybean oil, non-commercial traders were net short 2,656 contracts, an increase of 748 contracts. Trend-following fund traders (Non-commercial no CIT) increased their net short position slightly on the week to 16,776 contracts. The July soybeans pushed to the lowest level since March 31st overnight on weakness from outside markets and what appears to be a good start to the crop.
TODAY’S GUIDANCE: The short-term trend is down and the outlook for a sharp increase in US and world ending stocks appears to be the foundation for the bear case. In addition, traders see the crop off to a fast start and see good planting weather ahead to dry up fields. Some Midwest corn fields are flooded and either replanting or a switch to soybeans could be seen as a bearish force.
TODAY’S MARKET IDEAS: November soybean selling resistance comes in at 925 and 929 with 911 1/4 as some support. Keep 903 1/2 and 875 as next downside objectives. Selling resistance for July soybeans is 954 1/4 with 931 1/2 and maybe 895 1/2 as next downside objectives.
Soybean Market Commentary – 2010.05.17
by Terry Roggensack on May 17, 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: Weakness in outside market forces and concerns over the global economy if Europe struggles to recover from the debt crises sparked additional long liquidation selling pressures to grain markets overnight. Ideas that warmer weather and signs of some dryness ahead should help boost crop development was seen as a negative force on Friday and again overnight. China’s ministry of Commerce raised their estimate for China soybean imports in May to 4.79 million tonnes, up 36% from last year and up from 4.69 million as a previous forecast. Traders believe the increase is due to recent actions to slow imports of oil from Argentina which could boost the China crush pace. Sharp gains in the dollar and sharp losses in most other markets were credited with keeping a lid on soybean prices throughout the session on Friday. The dollar is again attracting flight-to-quality buying which we have seen at various points during the Euro-zone debt crisis. The National Oilseed Processors Association released its crush estimate for April on Friday morning and came in at 131.7 million bushels, about 5 million bushels below trade expectations, and this weak demand data added to the negative tone in the complex. The April crush rate is down from 149.627 in March and 134.115 in April, 2009. Soybean oil stocks were pegged at 2.811 billion pounds, up from 2.738 billion in March and 2.709 in April, 2009. The Commitments of Traders Futures and Options report as of May 11th for soybeans showed non-commercial traders were net long 39,782 contracts, a decrease of 27,644 contracts. This is an aggressive long liquidation pace for the week. The CIT Supplement showed Commodity Index traders held a net long position of 173,495 contracts, down 2,808 contracts for the week. In the disaggregated report, Managed Money traders reduced their net long position by a whopping 33,833 contracts for the week to hold a net long of 43,340 contracts. The selling trend from large traders is seen as a short-term negative force. In meal, non-commercial traders were net long 33,760 contracts, a decrease of 6,893 contracts. Non-commercial and non-reportable combined traders held a net long position of 44,833 contracts. This represents a decrease of 7,362 contracts in the net long position held by these traders. For soybean oil, non-commercial traders were net short 2,656 contracts, an increase of 748 contracts. Trend-following fund traders (Non-commercial no CIT) increased their net short position slightly on the week to 16,776 contracts. The July soybeans pushed to the lowest level since March 31st overnight on weakness from outside markets and what appears to be a good start to the crop.
TODAY’S GUIDANCE: The short-term trend is down and the outlook for a sharp increase in US and world ending stocks appears to be the foundation for the bear case. In addition, traders see the crop off to a fast start and see good planting weather ahead to dry up fields. Some Midwest corn fields are flooded and either replanting or a switch to soybeans could be seen as a bearish force.
TODAY’S MARKET IDEAS: November soybean selling resistance comes in at 925 and 929 with 911 1/4 as some support. Keep 903 1/2 and 875 as next downside objectives. Selling resistance for July soybeans is 954 1/4 with 931 1/2 and maybe 895 1/2 as next downside objectives.
Tags: Beanoil, Grains, Soybeans, Soymeal
About Terry Roggensack