Can Record Chinese Demand Shake Bean Bulls Out Of Their Winter Slumber?
Today’s Spotlight Market? – ? Soybean futures were higher yesterday, boosted by strong Chinese deliveries.? A positive economic outlook from the World Bank also had a positive effect on the market.? The World Bank raised its global economic growth forecast from 3.0 % to 3.2 %.? The Soybean market was risking testing technical support before rebounding over the past several sessions. Prices are now entering a chart area with heavy congestion, so it will be interesting to see if Soybean bulls will be able to build off of this momentum.
Fundamentals? – ? US weekly export inspections of Soybeans rose to 59.38 million bushels, last week.? This is an increase of 45 percent for the same prior last year.? Chinese demand represents 73% of exports, according to the USDA.? This was a positive surprise for Soybean bulls, who were expecting China to shift their imports to cheaper supplies from South American producers.? This is also an indication that there is strong demand for livestock feed in China, suggesting meat demand has been very strong.? China is the world?s largest hog producer.? Chinese demand for Soybeans from all sources was a record 7.4 million metric tons in the month of December.? Traders will focus on export data for the time being, as it is a quiet period of the year for USDA data.? The next major USDA report will be released on February 10.
Technical Notes? – ? View Today’s Chart ? ? Turning to the chart, we see the May Soybean contract trading in a tightening range. Soybeans have been in a wedge since early fall and the continuous chart has tightened to the point where a breakout looks to come sooner rather than later.? However, the direction of the potential breakout is unknown.? Prices rebounded over recent sessions due to oversold conditions and the oscillators are sitting at neutral levels.
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