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NEAR-TERM MARKET FUNDAMENTALS: Outside market forces are quite negative this morning and traders see the possibility of some negative news from the USDA. The supply/demand results this morning could influence trade but after the sharp break of the past four trading sessions, it may take some very negative results to cause further weakness. Traders see the possibility of a higher Brazil crop estimate and a possible adjustment lower in China import demand as reasons to suspect that US ending stocks might come in a little higher than last month. World ending stocks should also increase with traders looking for an increase of near 1 million tonnes from 58.21 million posted in February. China imported just 2.32 million tonnes of soybeans in February which was down 21% from last year and down 54.9% from January. January-February combined imports are at 7.45 million tonnes, up 6.1% from last year. Traders expect a recovery for March. The USDA attache from China believes that imports for the 2011/12 season will reach 58 million tonnes, up 5.5% from this season. An expanding livestock herd and continued growth in edible oil consumption are reasons for the increased imports. May soybeans closed sharply lower on the session yesterday and pushed to the lowest level since February 25th. Continued concerns that the Brazil and Argentina crop production estimates are increasing due to higher yield expectations provided a bearish influence on the market and helped spark another round of long liquidation selling to drive soybeans sharply lower. This pushed the market to the lowest level since March 1st and funds were noted as active sellers for the second day in a row. Liquidation ahead of the report was active and the selling intensified on the move under Tuesday’s lows. Talk of more rain for the Argentina crop for the coming weekend was also seen as a negative force. Brazil northern areas continue to see hefty rain totals in the forecast and this may be seen as a positive development as unharvested soybeans may be at greater risk to excess moisture issues. Soybean basis at the gulf was said to have jumped 5 cents to 80 cents over for spot delivery as tight supply helped support the higher bids. Traders see weekly export sales for soybeans for release ahead of the opening near 550,000 tonnes.
TODAY’S GUIDANCE: Eventually, the focus is likely to shift to the end of the month reports and with high profitability for corn and cotton compared with soybeans, there is a sense that soybean planted acreage estimates will begin to move down to lower than last year. If so, there will be little room for anything but near record yields to avoid further tightness for next year. If we were to see soybean planted area come down slightly this year to 77.0 million acres and yield at a simple 5-year average of 42.4 bushels per acre, soybean ending stocks would come in at just 43 million bushels for the 2011/12 season. With tight stocks and uncertainty over planted acreage in the US, the downside appears somewhat limited. On negative news for the reports this morning, next support for May soybeans comes in at the 1335 to 1310 zone. On supportive news, 1361 1/2 and 1381 3/4 are next resistance.
Soybeans: USDA To Set The Tone
by Terry Roggensack on March 10, 2011
Below is a sample of The Hightower Report’s 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: Outside market forces are quite negative this morning and traders see the possibility of some negative news from the USDA. The supply/demand results this morning could influence trade but after the sharp break of the past four trading sessions, it may take some very negative results to cause further weakness. Traders see the possibility of a higher Brazil crop estimate and a possible adjustment lower in China import demand as reasons to suspect that US ending stocks might come in a little higher than last month. World ending stocks should also increase with traders looking for an increase of near 1 million tonnes from 58.21 million posted in February. China imported just 2.32 million tonnes of soybeans in February which was down 21% from last year and down 54.9% from January. January-February combined imports are at 7.45 million tonnes, up 6.1% from last year. Traders expect a recovery for March. The USDA attache from China believes that imports for the 2011/12 season will reach 58 million tonnes, up 5.5% from this season. An expanding livestock herd and continued growth in edible oil consumption are reasons for the increased imports. May soybeans closed sharply lower on the session yesterday and pushed to the lowest level since February 25th. Continued concerns that the Brazil and Argentina crop production estimates are increasing due to higher yield expectations provided a bearish influence on the market and helped spark another round of long liquidation selling to drive soybeans sharply lower. This pushed the market to the lowest level since March 1st and funds were noted as active sellers for the second day in a row. Liquidation ahead of the report was active and the selling intensified on the move under Tuesday’s lows. Talk of more rain for the Argentina crop for the coming weekend was also seen as a negative force. Brazil northern areas continue to see hefty rain totals in the forecast and this may be seen as a positive development as unharvested soybeans may be at greater risk to excess moisture issues. Soybean basis at the gulf was said to have jumped 5 cents to 80 cents over for spot delivery as tight supply helped support the higher bids. Traders see weekly export sales for soybeans for release ahead of the opening near 550,000 tonnes.
TODAY’S GUIDANCE: Eventually, the focus is likely to shift to the end of the month reports and with high profitability for corn and cotton compared with soybeans, there is a sense that soybean planted acreage estimates will begin to move down to lower than last year. If so, there will be little room for anything but near record yields to avoid further tightness for next year. If we were to see soybean planted area come down slightly this year to 77.0 million acres and yield at a simple 5-year average of 42.4 bushels per acre, soybean ending stocks would come in at just 43 million bushels for the 2011/12 season. With tight stocks and uncertainty over planted acreage in the US, the downside appears somewhat limited. On negative news for the reports this morning, next support for May soybeans comes in at the 1335 to 1310 zone. On supportive news, 1361 1/2 and 1381 3/4 are next resistance.
Tags: Beanoil, Grains, Oilseeds, Soybeans, Soymeal, Soyoil
About Terry Roggensack