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|Morning markets: soybean futures revive as 'buy day' arrives
By Agrimoney.com - Published 04/10/2012
"Buy day" has arrived for soybean futures, and was living up to its name in early deals.
Many agricultural commodities show some seasonal patterns, and for soybeans one of the most noted is the autumn weakening under pressure of supplies from the harvest before finding its feet (if only temporarily), well, around now.
As broker US Commodities noted on Wednesday, talking of "the seasonal buy day", historically, "are to buy November soybeans October 4 until October 20", for a typical gain of \$0.42 a bushel.
And, having recovered from a three-month low in the last session to end fractionally higher, Chicago's November soybean lot continued its revival on Thursday, adding 0.9% to \$15.44 ¾ a bushel as of 09:05 UK time (03:05 Chicago time).
'Completed near-term liquidation'
The rise also put a bit of a cushion between the contract and its 100-day moving average, which it fell below in the last session, provoking fears of a further wave of liquidation by funds which follow such technical pointers.
However, in fact, Richard Feltes at RJ O'Brien proposed that the revival in soybean prices was "merely a case of funds having completed near-term liquidation" of their hefty net long position in the oilseed
Furthermore, history may be providing investors with another positive signal.
"Trade focus is shifting back to demand given the similarity of the current soybean price range to that in July, when the US Department of Agriculture forecast 2012-13 US soybean demand 430m bushels higher than their September forecast."
Balance sheet implications
Indeed, while ideas of the US soybean crop have been recovering, there is some idea that demand has plenty of scope for reviving too, with the country already having sold some 80% of the exports forecast for 2012-13, which is only a month old.
And this is providing some comfort to those hoping that the revival in soybeans might be able to make it past a key USDA Wasde report next week, which is expected to lift the official estimate for the US soybean yield.
"It is pretty tough to see an increased production estimate going straight to the bottom line in next week's monthly report," Kim Rugel at Benson Quinn Commodities said.
"With many private analysts currently projecting negative carryout, an increase in production may just get the US to 115m bushels pipeline minimum."
'Time to bounce?'
And there was a further technical signal to give soybean bulls some resolve.
Mike Mawdsley at broker Market 1 said: "For Fibonacci fans, Wednesday was 21 days from the high," one of the periods, with 34 days, 55 days etc, when followers of this kind of analysis look for price reversals.
"Is it time to bounce?"
That said RJ O'Brien's Richard Feltes trid to keep a lid on expectations.
"Recapturing even half of the September-early October row crop price free fall is unlikely without a threat to 2013 South American production," he said.
And, indeed, corn was hardly raring for gains in early deals, easing 0.25 cents to \$7.56 ½ a bushel for Chicago's December contract.
Besides its own harvest pressure, the grain is feeling a negative from poor ethanol data on Wednesday, when the US put its daily production last week at 785,000 barrels, the lowest since records began two years ago.
That dented ideas that lower corn prices would stimulate output, although at least a drop of 451,000 barrels to 18.81m barrels in stockpiles raised ideas that demand for the biofuel was still there, nor was it losing ground to imports.
As for foreign demand, the USDA will later unveil weekly export sales data, with traders expecting a figure of 200,000-400,000 tonnes but, after a series of disappointments, hardly ruling out a lower number.
And corn felt further weight from fellow grain wheat, which extended losses, by 0.4% to \$8.69 ¼ a bushel for the December lot, a fourth successive negative session.
(That said, the contract has still to give up all the 5% it gained on Friday, on a low US inventory number.)
Part of the weakness has been attributed to wetter weather for the US southern Plains boosting hopes for winter wheat sowings.
Furthermore, the results of the latest Egyptian tender provided "mixed signals for global wheat markets", Luke Mathews at Commonwealth Bank of Australia noted.
"The fact that no former Soviet Union wheat was purchased is supportive for global prices.
"But the fact that US exporters missed out bearish for Chicago futures," with Argentine and French grain preferred.
Elsewhere, Kuala Lumpur crude palm oil futures cautiously continued their recovery, amid talk that the Malaysia could cut its export tax on the vegetable to 8-10%, from a current rate of 23%, to boost hopes of competing against Indonesian supplies.
A build up in Malaysian inventories, broadly expected to have continued their rise above 2m tonnes last month, has been blamed for a slump in values to a three-year low this week.
The December contract stood at 2,361 ringgit a tonne, a gain of 0.4% on the day, but well below an intraday high of 2,404 ringgit a tonne.
And in New York, raw sugar extended its revival from mid-September lows, adding 0.9% to 21.77 cents a pound for March delivery, given help by better sentiment on external markets, where Brent crude added 0.6%, and the safe have of the dollar dropped 0.3% against a basket of currencies.
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