Today’s Spotlight Market
Soybeans saw large speculators leave the market in droves just prior to the 4th of July holiday weekend, as long liquidation selling dominated the trade. The most recent Commitment of Trader?s report shows non-commercial traders reducing their net-long position by just over 28,000 contracts during the week ending July 5. Commercials were mainly on the other side of the large speculative trade, covering almost 35,000 of their net-short positions during the reporting period. Only the small specs added to existing short positions during the sell-off.
Fundamentals
Some of the hottest temperatures so far this summer are expected over the Midwest starting next week, as a hot and dry pattern is heading its way east. The National Weather Service in its 6 to 10 and 8 to 14 day forecast is calling for well above normal temperatures and below normal precipitation in the main Corn and Soybean growing regions of the U.S. The timing of this heat spell has traders and producers nervous that what was generally ideal growing conditions so far this summer will evaporate along with soil moisture at a critical time for Corn, as pollination is occurring, and for Soybeans if the heat remains as we move into August. These weather concerns have caused some volatile trading activity, especially for Soybeans, as prices rallied nearly $1 from recent lows on the heat forecasts, only to see the market reverse on Thursday, as market participants are starting to believe much of Iowa and Illinois will still end up with good yields due to the excellent conditions of the crop currently. Summer grain markets can be quite volatile, as changing weather forecasts and large participation by large commodity funds can lead to large price moves in a relatively short period of time.?? Traders should be prepared to adjust position sizes and strategies to account for any potential changes in market volatility.
Technical Notes? -? View Today’s Chart
Looking at the daily chart for November Soybeans, we notice that despite the rather wide price swings seen since the beginning of June, it appears that the market has the appearance of downtrend following the move to contract highs on June 13. Since that time, we have seen prices make lower intermediate highs and lower intermediate lows, with Thursday?s price ?reversal? wiping out nearly ? the price gains seen this week. Momentum as measured by the 14-day RSI has started to weaken, with a current reading of 43.46. Remember the RSI was above 80 just about 1 month ago. Thursday?s high of 1123.00 now looks to be resistance for the November futures, with chart support seen at the July 8 low of 1021.00.?
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