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NEAR-TERM MARKET FUNDAMENTALS: A combination of bearish outside market forces and the outlook for a good start to the soybean crop in the US combined with more rumors that China is canceling or trying to move foreword import cargoes was enough to pressure the soybean market on Friday. July soybeans erased Thursday’s gains and then some on Friday amid a broad sell off in financial and commodity markets. Slower than expected export sales news for soybeans and good weather were seen as other forces to pressure the market. Traders see the threat of some hotter weather into the US Midwest next week but after good rains over the weekend at many Midwest locations and the forecast for hefty rain totals this week, many traders see warm and dry weather for a few days as a plus for the crop outlook and yield outlook for the season. The market will see the first weekly crop conditions report for soybeans this afternoon. The House approved a bill last week which will extend the US $1-per-gallon bio-diesel credit and traders will wait and see if the bill passes the Senate. The National biodiesel Board believes that the industry is now running at near 15% capacity since the credit was dropped January 1st. Soyoil used to produce bio-diesel in April reached just 130.065 million pounds which is still well short of the 2009 monthly high of 245.6 million pounds, the 2008 monthly high of 300.5 million and the 2007 high of 376.2 million pounds in August of that year. The Commitments of Traders Futures and Options report as of June 1st for Soybeans showed non-commercial-no CIT traders (trend-following funds) were net short 26,147 contracts increasing their net short by 5,764 contracts for the week. Traders see the fund selling trend as a short-term negative force. Commodity Index traders held a net long position of 171,182 contracts. This represents a decrease of 1,584 contracts for the week. For meal, Non-Commercial traders were net long 28,476 contracts, an increase of 802 contracts. Non-Commercial and Nonreportable combined traders held a net long position of 35,260 contracts, down 1,092 contracts for the week. In oil, non-commercial-no CIT traders (trend-following funds) were net short 25,122 contracts which was down 10,867 contracts for the week. This is seen as a sign of short-covering from trend-following fund traders and the buying is seen by many traders as a short-term positive force. Commodity Index traders held a net long position of 106,258 contracts. This represents a decrease of 2,402 contracts in the net long position held by these traders.
TODAY’S GUIDANCE: Rumors are that China may have canceled more than 10 shipments of South American soybeans and two shipments of US soybeans due to burdensome supply at China ports, lower crush margins in China and the lack of storage at ports. The surge higher in the US dollar recently is also seen as a potential negative force and this has been led by weakness in the Euro. About 9% of the US exports go to Europe. The market faces a surge higher in South American soybean supply for the months ahead and a decent start to the US crop. This could slow demand for US meal and soybeans on the world market. The delegation from Argentina in China has reported a lack of progress in their efforts to resolve the trade issues on soybean oil. And there is talk that China is preparing to hold off on Argentina imports for the rest of the year and China may also shy away from Argentina soybeans. Eventually, if the dispute is not settled this could be a supportive force. Unconfirmed reports of China canceling US soybeans plus more rain in the forecast in the US this week is a bearish set-up.
TODAY’S MARKET IDEAS: Selling resistance for November soybeans comes in at 904 1/4 with some light support at 893. A move under the May lows counts to 881 3/4 as next downside objective. Resistance for December meal comes in at 253.90 with 245.20 as next objective.
Soybean Market Commentary – 2010.06.07
by Terry Roggensack on June 7, 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 combination of bearish outside market forces and the outlook for a good start to the soybean crop in the US combined with more rumors that China is canceling or trying to move foreword import cargoes was enough to pressure the soybean market on Friday. July soybeans erased Thursday’s gains and then some on Friday amid a broad sell off in financial and commodity markets. Slower than expected export sales news for soybeans and good weather were seen as other forces to pressure the market. Traders see the threat of some hotter weather into the US Midwest next week but after good rains over the weekend at many Midwest locations and the forecast for hefty rain totals this week, many traders see warm and dry weather for a few days as a plus for the crop outlook and yield outlook for the season. The market will see the first weekly crop conditions report for soybeans this afternoon. The House approved a bill last week which will extend the US $1-per-gallon bio-diesel credit and traders will wait and see if the bill passes the Senate. The National biodiesel Board believes that the industry is now running at near 15% capacity since the credit was dropped January 1st. Soyoil used to produce bio-diesel in April reached just 130.065 million pounds which is still well short of the 2009 monthly high of 245.6 million pounds, the 2008 monthly high of 300.5 million and the 2007 high of 376.2 million pounds in August of that year. The Commitments of Traders Futures and Options report as of June 1st for Soybeans showed non-commercial-no CIT traders (trend-following funds) were net short 26,147 contracts increasing their net short by 5,764 contracts for the week. Traders see the fund selling trend as a short-term negative force. Commodity Index traders held a net long position of 171,182 contracts. This represents a decrease of 1,584 contracts for the week. For meal, Non-Commercial traders were net long 28,476 contracts, an increase of 802 contracts. Non-Commercial and Nonreportable combined traders held a net long position of 35,260 contracts, down 1,092 contracts for the week. In oil, non-commercial-no CIT traders (trend-following funds) were net short 25,122 contracts which was down 10,867 contracts for the week. This is seen as a sign of short-covering from trend-following fund traders and the buying is seen by many traders as a short-term positive force. Commodity Index traders held a net long position of 106,258 contracts. This represents a decrease of 2,402 contracts in the net long position held by these traders.
TODAY’S GUIDANCE: Rumors are that China may have canceled more than 10 shipments of South American soybeans and two shipments of US soybeans due to burdensome supply at China ports, lower crush margins in China and the lack of storage at ports. The surge higher in the US dollar recently is also seen as a potential negative force and this has been led by weakness in the Euro. About 9% of the US exports go to Europe. The market faces a surge higher in South American soybean supply for the months ahead and a decent start to the US crop. This could slow demand for US meal and soybeans on the world market. The delegation from Argentina in China has reported a lack of progress in their efforts to resolve the trade issues on soybean oil. And there is talk that China is preparing to hold off on Argentina imports for the rest of the year and China may also shy away from Argentina soybeans. Eventually, if the dispute is not settled this could be a supportive force. Unconfirmed reports of China canceling US soybeans plus more rain in the forecast in the US this week is a bearish set-up.
TODAY’S MARKET IDEAS: Selling resistance for November soybeans comes in at 904 1/4 with some light support at 893. A move under the May lows counts to 881 3/4 as next downside objective. Resistance for December meal comes in at 253.90 with 245.20 as next objective.
Tags: Beanoil, Grains, Soybeans, Soymeal
About Terry Roggensack