Soybean futures punch down through technical support levels

26.09.2016

Soybean futures led grains lower, despite the ongoing US Midwest rains, as harvest pressure and technical selling pushed the market lower.

It is true that rains are disrupting harvest, but when combines can get into the fields, yield reports have been heavy across the Midwest.

Tregg Cronin, at Halo Commodities, said the "market appears to be at a crossroad with concern over wet weather, gigantic anecdotal soybean yield reports, slowing demand from China, and anxiety over September 1 stocks being larger than realized".

Rain worries take a back seat

Support to the markets has been coming from the rain delayed US harvest, at a time when heavy export commitments mean hefty near-term demand.

"Flooding rains continue to plague northern areas of the Corn Belt and will limit soybean harvest progress," said Brian Henry, at Benson Quinn Commodities.

But these weather worries are taking a back seat.

Mr Henry said "the heaviest rains of yesterday and last weren't as wide spread as once feared".

"The 6 to 10 and 8 to 14 day forecasts hint at drier conditions for much of the Corn Belt with relatively warm day time temps also expected," Mr Henry said.

Technical selling

"Soybeans don't look very healthy from a technical standpoint," noted Mr Henry.

"The key features in soybeans are trade below the 200 day moving average and trade back too Monday's low at $9.66 ј a bushel," he said.

"Look for trade below this level to trigger another round of selling."

"Trade below the 20 day 963 ј would also trigger a round of selling.

And so it proved, as November soybean futures finished down 2.4%, at $9.55 a bushel, punching back through the 200-day moving average and other levels of technical resistance.

Corn short liquidation

Corn markets showed a bit more support, although they also finished the day down.

Darrell Holaday, at Country Futures, suggested that short-corn/long soybean positions were being liquidation.

"Keep in mind that the funds are heavily long soybeans and short corn," he said.

"When they decide to liquidate some length in the soybean complex as they are today, they tend to offset some short corn positions," he said. "Thus the strength in corn versus the soybeans."

December corn futures finished down 0.5%, at $3.36 Ѕ a bushel.

December wheat futures finished down 0.4%, at $4.04 ѕ a bushel, after finding some support on the 20-day moving average.

Arabica sell signal

A technical sell signal developed in arabica coffee futures, after the Thursday session saw prices settle below the previous session low, after reaching above the previous session high.

I & M Smith noted that the forecasts for "rain for the weekend ahead over the Brazil coffee growing areas, serve as a dampener to the speculative spirits," with "speculative liquidation" developing.

December arabica settled down 2.5%, at 151.40 cents a pound.

November robusta futures settled down 1.8%, at $1,966 a tonne.

Wild ride in sugar tails off

Sugar futures were largely unchanged, after the previous session's rollercoaster ride, where prices rallied some 5% before ending the day down after a precipitous late day reversal.

Tom Kujawa, at Sucden Financial, noted that "we tend to get wild price activity in the run up to key expiries and the October contract has far from disappointed".

March raw sugar futures settled up 0.1%, at 22.70 cents a pound.

Rain fears ease for cotton

Cotton markets turned lower,  after a four day rally spurred by concerns about unwanted rain in the US cotton belt.

"Forecasters say West Texas, the most cotton dense region, is likely to miss out on the heaviest of that rain," noted Tobin Gorey, at CBA.

December cotton futures finished down 2.4%, at 69.98 cents a pound.     


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