Soybean selling should be due to slow, to judge by the date.
"Over the past four years, soybeans have bottomed during
first week of October," Kim Rugel at Benson Quinn Commodities said.
Not that this necessarily means that the downward trend need
necessarily be over.
"In two of those years, November futures expired higher
while in other two the contract retested harvest lows again and expired near that
But with the US harvest advancing, and nearer the end of the
period when buyers have ready supplies to purchase off the combine, there is a
seasonal trade of cashing in shorts at this time of year.
'Fund continues to
As a further reason for caution over further selling,
investors will have noted that Chicago's November lot closed just about its
100-day moving average in the last session.
Could that mark a point around which to build a rebound?
The contract on Wednesday dropped without difficulty through
the 100-day line, below which it has not closed below for four months, and only
giving funds cause to further liquidate positions.
"The soybean market likely remains under pressure as managed
fund long continues to liquidate," Richard Feltes at RJ O'Brien said.
Added cause to sell came from overnight estimates from
broker FCStone that the US soybean crop would, in the US Department of
Agriculture's next Wasde crop report, next week, be raised to 2.489m bushels.
That upgrade of 215m bushels reflected a yield pegged at
38.2 bushels per acre, 2.9 bushels per acre above the current USDA figure.
OK, not all observers are so upbeat, with Michael Cordonnier
at Soybean and Corn Advisor sticking with his estimate of a 2.560bn-bushel crop
and yield of 35.0 bushels per acre.
However, he did acknowledge that the risk was of a larger harvest.
'Cut the rationing'
The bottom line was, as Mike Mawdsley at Market 1 said, that
"the soybean market is rethinking the size of this year's crop.
"With the higher stock number Friday, and potentially bigger
production than expected, the carryout numbers may be larger than we have been
thinking for a few weeks."
And by potentially a margin, according to calculations by RJ
O'Brien's Mr Feltes.
"A 5 bushels-per-acre gain in the US soy yield to 40.3 bushels
per acre would cut the 2012-13 US soy rationing from 487m bushels down to 100m bushels,
and in so doing seriously undermine the case for $15.00+ a bushel soybeans," he
Watch out below
Technically, the next big mark for the November soybean is
around the $15.17-a-bushel mark, the 50% retracement of this summer's rally, so
an important point for followers of Fibonacci analysis, and also at the bottom
of a chart gap dating back to June 29.
The contract fell through that with ease too to stand at $15.11
a bushel at 09:30 UK time (03:30 Chicago time), a decline of 1.3%, having
touched a three-month low of $15.04 a bushel earlier.
Below that, the next support is the psychologically
important $15.00-a-bushel mark, and beneath that…
"There was a gap made July 5 in the chart at $14.78-14.93 a
bushel," Market 1's Mr Mawdsley said.
"If tested, that would be about a $3.00-a-bushel sell-off
from the September 4 high of $17.89 a bushel."
'Upside should be
Palm oil did its
bit to try to support the oilseeds complex by claiming back some of its 8%
losses of the last session.
Kuala Lumpur's December lot rebounded 3.0% from a three-year
low for a benchmark contract to stand at 2,320 ringgit a tonne.
Not that everyone was so convinced by the recovery, which comes
in the face of swelling Malaysian inventories, boosted by softish exports and a
seasonal high in production.
The trend of output outpacing exports is "to continue
through the fourth quarter, keeping [Malaysian] inventory levels above 2m
tonnes, a psychological range seen as denoting an ample supply of crude palm
oil in the market," Malaysia's Kenanga Investment Bank said.
"Hence, the crude palm oil price upside should be
However, grains suffered a further sell-down too, which it
should be noted comes amid weak but not dire sentiment on external markets.
The likes of shares, Brent crude and London copper
are lower, weakened by Australian data showing the country recorded its biggest
trade deficit in August in three and a half years, result large down to lower
volumes and prices of commodity sales.
Tokyo shares closed
down 0.5%, while Brent crude was 0.7%
lower, dropping below $111 a barrel.
The safe haven of the dollar was trading flat.
But corn suffered
a bit of a blow from FCStone estimates that next week's USDA Wasde report will
show a US crop of 10.824bn bushels, on a yield of 123.9 bushels per acre.
While not a huge increase over the 10.727bn bushels production
that the USDA is currently factoring in, many analysts have been expecting a
further downgrade, and a yield of some 120 bushels per acre.
December corn stood 1.2% lower at $7.49 ½ a bushel.
And with corn, on which bulls have staked hopes after
lower-than-expected US inventory data on Friday, weakening, wheat for December dropped too, losing
1.5% to $8.58 ¾ a bushel.
"Wheat is retreating to the lower
end of a 10-week trading range on slow export demand, improving US hard red
winter wheat area moisture and lower-priced Black Sea/Australian wheat offers,"
Mr Feltes said.
Still, there is hope.
Luke Mathews said: "It appears
the recent slide in prices may be sparking the interest of notable importers.
"Egypt's GASC is seeking at least
60,000 tonnes of milling wheat for December shipment while Japan is seeking to
buy the most wheat in a month in their regular weekly tender."
The results later of the GASC
tender stand to reveal just how competitive, or not, US wheat is.