Soybeans Continue To Surge

June 3, 2013 01:07 AM

What Traders are Talking About:

Overnight highlights: As of 6:15 a.m. CT, corn futures are mostly 4 to 6 cents higher, soybeans are mostly 22 to 27 cents higher and wheat is 3 to 7 cents higher. Based on the strong overnight performance, bulls will maintain solid control on the open this morning. Cattle and hog futures are expected to open the week with a mixed tone.


* Soybean surge continues. Soybean futures picked up overnight where they left off last week, with futures sharply extending the recent price surge. While corn planting delays will likely lead to some switching of acres, soybean traders are concerned with planting delays even though beans can overcome a late start with favorable weather once the crop hits the flowering, pod-set and pod-fill stages. The new-crop concerns are being heightened by tight old-crop supplies. Key near-term resistance for July soybean futures is at the May 23 high of $15.46 3/4, while tough resistance for November soybeans is in the $13.50 to $13.60 area. Corn futures are also rallying amid planting-delay concerns, but they are definitely playing second fiddle to soybeans. And the wheat market is even finding support on spillover from soybeans.

The long and short of it: Attitudes are strongly bullish in the soybean market. Soybeans are the key to near-term price action in the grain and soy complex.

* South Korea: U.S. wheat shipments GMO-free. Initial tests of U.S. wheat and flour shipments found no GMO content, according to the South Korean Ministry of Food and Drugs. Final test results on recent shipments are expected Wednesday. A ministry official says, "Although our preliminary test result shows no genetically modified wheat was found, we are aiming to test all samples of wheat and flour imported from the U.S." Meanwhile, European Union officials say it will be at least two weeks before they can test shipments of U.S. wheat even though Monsanto has provided them with a method of testing for the unapproved GMO wheat strain.

The long and short of it: Market concern over the GMO wheat situation is easing and will continue to ease as long as there aren't any positive tests. And I'm not anticipating any positive test results.

* Mixed signals from Chinese manufacturing data. China's official purchasing managers' index (PMI) rose to 50.8 in May from 50.6 in April, according to the Chinese government. Sub-indices for new orders and export orders both ticked higher last month. Meanwhile, the final HSBC PMI, which focuses on smaller manufacturers, fell to 49.2 in May from 50.4 in April as domestic and export demand both slowed. That was the lowest HSBC PMI reading since October. 2012. The data signals China's large manufacturers are doing better than smaller factories.

The long and short of it: The mixed signals raise some questions about the health of China's manufacturing sector. And there are even some questions about whether the Chinese government may have inflated its official PMI numbers in an attempt to ease recent concerns about its economy -- the manufacturing sector, in particular.


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