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Commentary
Soybeans were pressured on three straight days of producer selling to begin the week but recovered on Thursday/Friday amid profit taking as the theme in my opinion. The late week rebound was encouraging, particularly when viewed in light of strong daily and weekly export news. But the ability of soybeans and products to sustain rallies is open to serious question. Does the late week rally get rewarded with selling? Earlier in the week pressure from the looming Brazilian harvest likely exacerbated the soybean market’s reaction to the Fed’s more hawkish tone and the resulting U.S. dollar surge and equity market breakdown. The enormous Brazilian crop will soon become a reality, as will the potential of President Trump’s trade policies. In my view strong production headlines continue to come out of Brazil with private estimates now feeling pretty confident about a 170 MMT+ soybean crop. Argentina has more weather risk as it is earlier in the growing season and forecasts are appearing to show some dryness over the next 15 days. It is too early to draw too much concern on crop size, but the Argentina forecast may begin getting more attention if the dryness persists. Todays close just below 9.80 March beans is nestled just below a key trendline. (see chart). Consecutive closes over 9.80 push the market to 10.02 which is the 21-week moving average. Above that its 10.08, the next key trendline resistance. We close above these levels, don’t be short, the bean market could run to 10.47/49. Support is 971. A close under and its 9.54 and then 9.41. A close under 9.41 and its katy bar the door to 9.02. Keep in mind we are in holiday markets mode until the first full week of January. No trade recs as of right now as the stalemate of the US debt ceiling and potential government shutdown look as there is no deal as of this post.
Trade Ideas
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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