Soybean Prices Steady Ahead Of USDA Report
Today’s Spotlight Market
Brazilian producers are expected to produce a record Soybean Crop this season, despite historic drought conditions over parts of the nation?s Soybean growing areas.? Brazil?s government agency overseeing crop production, Conab, expects the 2013-14 Soybean harvest to total a record 86.1 million tons.? While the size of the harvest is indeed impressive, it will still fall short of earlier estimates for a harvest over 90 million tons due to less than ideal weather this growing season.
Fundamentals
Earlier this week we took a look at the Corn market and how market participants are positioning themselves prior to the USDA crop production and supply/demand report. This morning let?s take a peek at the Soybean market and what traders are anticipating from the USDA data.
U.S. old-crop Soybean inventories are expected to show a moderate decline from April?s estimate of 135 million bushels, but world inventories are expected to increase by 350,000 tons to nearly 70 million tons. It is the new-crop estimates were the variance of opinions lie. For the 2014/15 marketing year, traders expect U.S. Soybean carryover to more than double 2013/14 totals, with average estimates hovering just over 300 million bushels. However, analysts estimates have varied widely but a figure between 250 and 350 million bushels would be considered a ?bull?s-eye?.?
Old-crop vs. new-crop Soybean spreads have begun to weaken the past several sessions as U.S. old crop exports start to wane with sales starting to move towards Brazil and Argentina as the new-crop harvest continues. However, last week U.S. exporters sold nearly 41,000 tons of old-crop soybeans which is still a significant amount given the current tight old-crop supplies in the U.S., as well as new-crop South American supplies starting to come to market. This may help to keep Old-crop Soybean prices supported in the near-term.
Technical Notes? -? View Today’s Chart
Looking at the daily chart for July Soybeans, we notice what appears to be a rounded top formation on the daily chart. Prices have retreated nearly? 90-cents since recent high were made, but a bout of short-covering buying, as well as better than expected old-crop exports last week have put an end to the recent price sell-off at least for now. Trading volume has been light the past several weeks, despite a move towards multi-month highs. 1365.50 is seen a strong support for July Soybeans, with resistance found at the recent highs of 1531.75.?
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