Futures Roundup

Bean Demand In Focus

    Fundamentals
Soybean futures continue to trade near contract highs, as demand for the oilseed remains robust. Although Chinese imports for the month of August were weaker than in July, that was not unexpected given the breakneck speed at which they were previously moving. Export demand is expected to remain strong, as South American growers are expected to stay on the sidelines until next year. This year, farmers are expected to reap 12-14% less Soybeans than last year, which may put tremendous stress on supplies. Some wonder if US export supplies will make it to the South American harvest. As a result, South American growers are expected to ramp-up their production by over a third from last year. That may put downward pressure on crops over the long haul. In the near-term, the debate will rage over the potential size of this year's crop size. The strong export demand could make the argument a moot point and tip the scales in favor of the bulls.

   Technical Notes
Turning to the chart, we see the November Soybean contract making new highs at 1789 before backing off. Per the continuation chart, this is the second time prices flirted with the $18 mark before backing off. Prices are near the 20-day moving average, which can be seen as a pivotal level in the near-near-term. If prices fall to hold the average, it suggests that a near-term high may be in place. On the downside, the 1575 level can be seen as a significant support mark. The RSI has not been sitting below the 50 level after being overbought. Momentum is beginning to show some positive divergence from RSI, which can be seen as a positive.

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About Mike Zarembski

Born in the grain pits of the Mid-America Commodity Exchange (MidAm) in the early 1990s, Mike's futures career soon shifted to the offices of TD Waterhouse in 1999, followed by Xpresstrade in 2002 and eventually optionsXpress in 2007.