Monday was an extremely weak day at the Chicago Board of Trade with soybeans closing "lock-limit down" for the first time since March 2011! December corn closed 34 cents lower at $7.48, November beans down 70 cents at $16.69, and December wheat down 46 ¼ cents at $8.78.
The fact that we finished 70 cents lower means that trading limits will expand to $1.05 for soybeans tonight/tomorrow. The weakness wasn’t particularly associated with any specific news. We did see a USDA sale announcement of 210,000 MTs of US Soybeans to "unknown destinations" for 2012-2013 delivery. Export inspections were below estimates for beans but this was announced after soybeans had already made the majority of the move lower. Moreover it was on very heavy volume at 160,103 electronic November contracts trading.
Corn and wheat export inspections were both above their market estimates but didn’t seem to provide any support as they followed soybeans lower.
Weekly Crop Progress shows corn at 26% harvested compared to 9% on average. Soybeans are 10% harvested compared to 4% on average. Corn’s good-excellent rating went up 2 points from last week and is now at 24%. Soybeans good-excellent rating gained 1% and is now at 33%.
Will this selloff continue? We are starting to approach some major technical levels for corn and soybeans and will have to see if those hold. The first major number for corn is at $7.45 ½ and then below there - $6.76 would fill the 4th of July gap.
Chart: December Corn
For Soybeans first support may be found at the 50 Day Moving Average at $16.54. The 4th of July gap is all the way down at $14.78. This is obviously well below where we are currently trading but if for some reason we see an all out liquidation from the funds this is not unbelievable. We have never seen a long soybean position held by the managed money this large. With so much conflict in the Middle East, today may have been a general RISK OFF trade in light of potentially more serious conflict.
Chart: November Soybeans
Another sign of a very obscure trading day was crude oil’s intraday break. There were no major news stories associated with this collapse, and it happened all at once. The Nymex claims that they do not believe there was a technical problem at this time.
Chart: 5 Minute October Crude Oil
For now we want to remain with sustainable hedges as we progress through harvest. To sign up for a free EHedger trial please click on the link below.
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