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NEAR-TERM MARKET FUNDAMENTALS: The set-back in wheat futures overnight helped to pressure the market as traders see wheat as the leader in the short-term. November soybeans jumped as much as 64 1/2 cents in just four trading sessions as some threatening weather for the crops in the south and a surge in wheat futures have helped support active fund buying. Talk of the overbought condition of the market and weather uncertainty were seen as limiting forces on the rally yesterday. The USDA reported a sale of 116,000 tonnes of soybeans for China (new crop) and 130,000 tonnes of US soybeans for unknown destination. Strong export demand has helped provide underlying support. The weekly crop conditions report showed that 66% of the soybean crop was rated good/excellent compared to 67% last week and 67% last year. The 10 year average for this time of year is 60%. Soybeans setting pods reached 53% as compared with 33% last year and 48% as the 5-year average. Crop progress this week depends on the location. Weather for Iowa, the northern half of Illinois and areas to the north look to get hit with “ring of fire” thunderstorms and temperatures in the 80′s and low 90′s. The hot and wet set-up looks favorable for crops in this region. However, rainfall looks low for the southern crops and temperatures are very high so crops in Arkansas, Missouri and the delta look to come under some stress. Tbis could lower yield potential for crops in the severe heat. St Louis looks over 100 today and Hutchison Kansas was a record high 109 yesterday. November soybeans closed slightly higher on the session yesterday but 19 1/2 cents from the early highs. Funds were active buyers early to support the market, but long liquidation selling emerged on the early rally and there was a lack of much commercial buying interest as the market drifted lower for much of the session. Talk of rain in Iowa yesterday and rain in the forecast for the delta for later this week helped to pressure the market off of the highs as hot and wet weather is seen as mixed to generally positive for the developing crop. Traders said that a sharply higher crude oil market along with ideas that China’s economic growth could accelerate were supportive to soy oil. This may be particularly supportive to oil since China remains in a trade war with Argentina that is switching soybean oil export business to the US. This week’s export inspections for soybeans were 5.9 million bushels, down from 7.1 million last week. Total inspections to-date stand at 95.6% of the USDA’s projection for 2009/10 versus the 5-year average of 93.9%. Inspections need to average 13.2 million bushels each week to reach the USDA’s projection.
TODAY’S GUIDANCE: Weakness in the face of another new low for the US dollar and strength in energy market suggests the market is in an overbought condition. The weather outlook is mixed to supportive for the short-term but the eastern Corn Belt looks cooler for the 6-10 day outlook. The southern mid-west/delta region weather is threatening to yield but some scattered rains could hit the region later this week. The psychology is turning more supportive but the market is overbought short-term.
TODAY’S MARKET IDEAS: The upside break-out left 1025 1/4 as upside objective for November soybeans and this target was hit before the weak close yesterday. Look for resistance today at the 1009 3/4 to 1013 1/2 zone with support back at 987 and 974. The reversal in December meal leaves 283.80 as short-term target. December soyoil buying support is 40.44 with 42.57 as next target.
Soybean Market Commentary – 2010.08.03
by Terry Roggensack on August 3, 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: The set-back in wheat futures overnight helped to pressure the market as traders see wheat as the leader in the short-term. November soybeans jumped as much as 64 1/2 cents in just four trading sessions as some threatening weather for the crops in the south and a surge in wheat futures have helped support active fund buying. Talk of the overbought condition of the market and weather uncertainty were seen as limiting forces on the rally yesterday. The USDA reported a sale of 116,000 tonnes of soybeans for China (new crop) and 130,000 tonnes of US soybeans for unknown destination. Strong export demand has helped provide underlying support. The weekly crop conditions report showed that 66% of the soybean crop was rated good/excellent compared to 67% last week and 67% last year. The 10 year average for this time of year is 60%. Soybeans setting pods reached 53% as compared with 33% last year and 48% as the 5-year average. Crop progress this week depends on the location. Weather for Iowa, the northern half of Illinois and areas to the north look to get hit with “ring of fire” thunderstorms and temperatures in the 80′s and low 90′s. The hot and wet set-up looks favorable for crops in this region. However, rainfall looks low for the southern crops and temperatures are very high so crops in Arkansas, Missouri and the delta look to come under some stress. Tbis could lower yield potential for crops in the severe heat. St Louis looks over 100 today and Hutchison Kansas was a record high 109 yesterday. November soybeans closed slightly higher on the session yesterday but 19 1/2 cents from the early highs. Funds were active buyers early to support the market, but long liquidation selling emerged on the early rally and there was a lack of much commercial buying interest as the market drifted lower for much of the session. Talk of rain in Iowa yesterday and rain in the forecast for the delta for later this week helped to pressure the market off of the highs as hot and wet weather is seen as mixed to generally positive for the developing crop. Traders said that a sharply higher crude oil market along with ideas that China’s economic growth could accelerate were supportive to soy oil. This may be particularly supportive to oil since China remains in a trade war with Argentina that is switching soybean oil export business to the US. This week’s export inspections for soybeans were 5.9 million bushels, down from 7.1 million last week. Total inspections to-date stand at 95.6% of the USDA’s projection for 2009/10 versus the 5-year average of 93.9%. Inspections need to average 13.2 million bushels each week to reach the USDA’s projection.
TODAY’S GUIDANCE: Weakness in the face of another new low for the US dollar and strength in energy market suggests the market is in an overbought condition. The weather outlook is mixed to supportive for the short-term but the eastern Corn Belt looks cooler for the 6-10 day outlook. The southern mid-west/delta region weather is threatening to yield but some scattered rains could hit the region later this week. The psychology is turning more supportive but the market is overbought short-term.
TODAY’S MARKET IDEAS: The upside break-out left 1025 1/4 as upside objective for November soybeans and this target was hit before the weak close yesterday. Look for resistance today at the 1009 3/4 to 1013 1/2 zone with support back at 987 and 974. The reversal in December meal leaves 283.80 as short-term target. December soyoil buying support is 40.44 with 42.57 as next target.
Tags: Beanoil, Grains, Soybeans, Soymeal
About Terry Roggensack