Headlines:
- First notice day for November futures is Monday, October 31st
- Funds still buying soybean futures… for now
The rally in soybean futures continues, despite a glutted cash market, and reports of huge US yields. “Another day, another higher soy complex that continues to defy cash markets, spreads and analyst gut feelings,” said Tregg Cronin at Halo Commodities. But he warned that “one day the futures are going to wake up to what the cash is doing”. “Sinking cash premiums, widening board carries and competitor exports [from Brazil] are hardly bullish signals to the soy complex,” Mr Cronin said. Still, fund support for soybeans seems to still be in place, despite expectations of a big upgrade to the US Department of Agriculture’s soybean yield estimates next month. “Will funds continue to buy soybeans right into the November 9 crop production report with yield estimates climbing?,” asked Mr Holaday. “That will be very interesting to see develop late last week.”
- IGC underlines huge China grain stocks, as it ups world harvest hopes
The International Grains Council underlined the huge extent of China’s grain stocks, which have spurred the country to shake-up its subsidies, as the group upgraded again its estimate of this year’s record harvest. The intergovernmental group – while raising by 7m tonnes to 498m tonnes its forecast for world grain inventories at the close of 2016-17, growth of 23m tonnes year on year – flagged that some 40% of these supplies would be stockpiled in China. “Grains inventories… in China could reach 200m tonnes,” a total which, while not unprecedented, has not been seen since the 1990s. The forecast comes amid a continued market focus on China’s grain inventories, and the implications of the measures that the country is undertaking to reduce its stockpiles which, besides swallowing up large amounts of capital, are believed in many cases to be stored in poor conditions, encouraging crop deterioration.
Summary:
We pegged potential resistance for the November Soybean contract at 1020 in our last few newsletters. Today that contract made a high exactly at 1020. The price action was a bit of a rollercoaster of a ride. Trading was up in the overnight session then it topped this morning at 6:15 am Eastern. It then suffered a huge decline into the regular session open where it rallied for the balance of the day. This type of erratic behavior is clearly the program trading from funds participating in portfolio accumulation. Only two trading days away from first notice so we expect to see a declines in trading volume going forward. November Beans finished the day up 3.50 points and the January contract gained 3.0 points.
Corn futures moved in a similar intraday price pattern to that of Beans. Beans finished at about the halfway mark of the day’s trading range whereas Corn finished near the top of its intraday range. We had a potential turn date time factor of October 25th for Corn and the price action retraced down into that date. Today’s move in Corn was fueled by fund buying and it is starting to look like the higher prices may stick. December Corn jumped 3.75 and the March contract rose 3.25. Wheat futures posted another positive gain but it topped at 10:30 am Eastern and leveled off for the balance of the day. It closed +3.0 points on the day but was well off of its high.
