Late Corn Plantings Could Boost Bean Crop Size
???? Today’s Spotlight Market
Soybean futures have been under pressure in recent weeks, despite the prospect of late plantings. The delay in plantings could actually result in higher Soybean plantings from farmers that missed the window in Corn. Some traders are also concerned about slowing growth in China, which may result in decade low demand, as well as record South American exports. Central bank activity should be supportive for commodities as a whole. The Fed indicated that it would continue easing, and even opened up the door for an expansion of QE. The ECB lowered interest rates to a record low 0.50%, as it attempts to get the Eurozone economy back on track.
???? Fundamentals
Soybean futures have largely taken a back seat to Corn, as weather conditions have pushed back Corn plantings. Soybeans typically are not planted until the very end of April into May, lessening the concern about the late start. As we saw last year, early and large plantings do not always equal a large crop. Likewise, some Soybean traders have not been overly concerned about the planting conditions to this point. With the most recent cold snap hitting the Corn Belt, some acreage may get diverted to Beans from Corn. Some traders have already been concerned that South American Bean exports could reach record levels this month, which could cause a glut of old-crop inventories due to shipping vessels. Some traders are expecting the next plantings report to show an increase of between half and one million acres. The 10-day weather forecast shows dryer and warmer conditions for much of the growing region, which would be conducive to planting.
???? Technical Notes
Turning to the chart, we see the November Soybean contract continuing to trend lower. Prices did get a brief boost from technically oversold conditions and support just below the 1200 level. The boost, however, failed to garner any sort of momentum. Prices failed to cross the major moving averages. The market did trade slightly above the 20-day average for several sessions, but was not able to convincingly breach the average.
November Soybeans could gain some traction if prices are able to cross above the 1250 resistance level. Beyond the 1200 mark, additional support can be found at 1150 and 1134.50. The oscillators are showing neutral to bearish readings.
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