Swine Flu May Hurt
???? Fundamentals
The bird flu, which has killed at least nine people since last month, may result in Chinese Soybean imports falling for the first time since the 2003-2004 marketing year. Citizens have been told to avoid contact to limit their potential of contracting the deadly virus. Beans are used in feed for poultry. Farmers are expected to plant heavily this year to capitalize on high prices, suggesting a setback in Chinese imports could lead to a sharp drop in prices.
Outside markets will probably do little to help Soybean prices. Global Corn inventories are expected to be 125.29 million metric tons, versus last month’s estimate of 117.48 million metric tons, according to the USDA. Many analysts expected a jump in Corn inventories, but to a lesser degree, at 120.41 million metric tons. This may create bearish sentiment in the entire grain complex.
???? Technical Notes
Turning to the chart, we see the July Soybean contract trading just above support at the 1350 level. This is a stout and pivotal support level, suggesting a downside breakout could be a significant market event. Price could test the low 1200’s on a bearish breakout.
The RSI was oversold, which helped prices hold the 1350 mark. Prices failed to cross the 20-day moving average after bouncing, which can be seen as negative near-term.
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