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NEAR-TERM MARKET FUNDAMENTALS: There is a positive tilt to outside markets and a jump in corn prices overnight helped boost soybean futures as well. Hefty rains in Iowa over the weekend were seen as beneficial to crop development but much of the southern Corn Belt and parts of the northern delta have not seen much rain in the past week with high temperatures in the east starting to provide some underlying support. Rain over the past few days in drier areas of northeast China is seen as a negative development for the market. India monsoons have also help boost oilseed production prospects. Argentina officials plan to raise the minimum blending requirement for bio-fuels in gasoline and diesel to 7% and are considering moving to a 10% mix soon. The current mix is at 5%. November soybeans rallied early on Friday but eased late in the session to close just 1/4 of a cent higher on the day. Corn/soybean spread action was active last week in the wake of Tuesday’s bullish corn reports from the USDA. Support came from a lower dollar through early afternoon, but this was contrasted with erosion in crude oil prices on Friday. Weather forecasts were also in some conflict late last week. Traders see good weather for crop development this week but there is significant heat in the forecast for next week and this may have helped provide some underlying support. The Commitments of Traders reports as of June 29th showed Non-Commercial traders were net long 15,731 contracts, a decrease of 9,184 contracts for the week and the selling trend is seen as a short-term negative force. Commodity Index traders held a net long position of 170,909 contracts in soybeans, down 544 contracts for the week. For meal, Non-Commercial traders were net long 52,513 contracts which was up 3,988 contracts for the week. Non-Commercial and Nonreportable combined traders held a net long position of 65,037 contracts. In oil, Non-Commercial traders were net short 29,124 contracts, an increase of 18,707 contracts for the week and the selling trend is seen as a short-term negative force for the market. Commodity Index traders held a net long position of 110,526 contracts, down 3,037 contracts for the week.
TODAY’S GUIDANCE: While old crop ending stocks could tighten considerably in the July Supply/demand report for release on Friday, the market still faces a higher yield potential for the new crop and also face a sharply higher supply of soybeans and products from South America which could cause US usage numbers to slip in the next quarter. China crops appear to be improving and the turn higher in corn prices seems to be the main positive force for the soybean complex. A burdensome supply outlook with normal weather suggests soybean bulls “need” a significant weather issue in late July or August to disrupt yield potential.
TODAY’S MARKET IDEAS: A recovery bounce based on corn or positive outside markets appears to be a selling opportunity. Selling resistance for November soybeans comes in at 914 1/4 and 920 1/2 with 887 and 864 as next downside targets. December meal selling resistance is at 264.60 with 249.70 as next target.
Soybean Market Commentary – 2010.07.06
by Terry Roggensack on July 6, 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: There is a positive tilt to outside markets and a jump in corn prices overnight helped boost soybean futures as well. Hefty rains in Iowa over the weekend were seen as beneficial to crop development but much of the southern Corn Belt and parts of the northern delta have not seen much rain in the past week with high temperatures in the east starting to provide some underlying support. Rain over the past few days in drier areas of northeast China is seen as a negative development for the market. India monsoons have also help boost oilseed production prospects. Argentina officials plan to raise the minimum blending requirement for bio-fuels in gasoline and diesel to 7% and are considering moving to a 10% mix soon. The current mix is at 5%. November soybeans rallied early on Friday but eased late in the session to close just 1/4 of a cent higher on the day. Corn/soybean spread action was active last week in the wake of Tuesday’s bullish corn reports from the USDA. Support came from a lower dollar through early afternoon, but this was contrasted with erosion in crude oil prices on Friday. Weather forecasts were also in some conflict late last week. Traders see good weather for crop development this week but there is significant heat in the forecast for next week and this may have helped provide some underlying support. The Commitments of Traders reports as of June 29th showed Non-Commercial traders were net long 15,731 contracts, a decrease of 9,184 contracts for the week and the selling trend is seen as a short-term negative force. Commodity Index traders held a net long position of 170,909 contracts in soybeans, down 544 contracts for the week. For meal, Non-Commercial traders were net long 52,513 contracts which was up 3,988 contracts for the week. Non-Commercial and Nonreportable combined traders held a net long position of 65,037 contracts. In oil, Non-Commercial traders were net short 29,124 contracts, an increase of 18,707 contracts for the week and the selling trend is seen as a short-term negative force for the market. Commodity Index traders held a net long position of 110,526 contracts, down 3,037 contracts for the week.
TODAY’S GUIDANCE: While old crop ending stocks could tighten considerably in the July Supply/demand report for release on Friday, the market still faces a higher yield potential for the new crop and also face a sharply higher supply of soybeans and products from South America which could cause US usage numbers to slip in the next quarter. China crops appear to be improving and the turn higher in corn prices seems to be the main positive force for the soybean complex. A burdensome supply outlook with normal weather suggests soybean bulls “need” a significant weather issue in late July or August to disrupt yield potential.
TODAY’S MARKET IDEAS: A recovery bounce based on corn or positive outside markets appears to be a selling opportunity. Selling resistance for November soybeans comes in at 914 1/4 and 920 1/2 with 887 and 864 as next downside targets. December meal selling resistance is at 264.60 with 249.70 as next target.
Tags: Grains, Soybeans
About Terry Roggensack