- We are looking at Chicago soybeans and wheat heading into the close on a firm note with corn also trading (just) in positive territory. It seems that soybean volume is well above what has been seen in the last few weeks whilst the volumes traded in grains are closer to normal. The reason given for the higher volume in soybeans is Chinese buyers fixing prices to lock in favourable crush margins, which has triggered technical buying as prices (basis Nov ’15 contract) pushed strongly through the 50 day moving average. Soybean products, meal and oil, similarly pushed higher, breaching key resistance levels.
- Outside markets have been mixed with crude oil bouncing back from Monday’s price break and gaining $0.50/barrel whilst the US$ Index is firm and the US$ some 2% up vs. The Brazilian Real. Commodity Indices are generally firmer whilst equity markets are also clawing back from earlier losses.
- Weather in Brazil looks to remain dry in the coming five days, which will allow planting to continue apace, although some are suggesting it is dryer than desirable but it is too early to raise excitement levels just yet. Seasonal rains are expected to develop in coming weeks, but it would be prudent to keep an eye on weather developments – just in case!
- It seems that soybeans are set for their best close (basis Nov ’15) since mid-August and the break of key resistance will pave the way for firmer trade into the end of the week as $9.20-$9.30 is targeted. This is the level at which we would expect to see a secondary top form, from which we would expect prices to decline. Time, as always, will prove us either right – or wrong.