For the week March corn fell 4 cents, May corn was 3 ¼ lower, January soybeans lost 28 1/2, March fell 29 ¼, March soybean meal was $6.60 lower, March bean oil dropped 159 points, March soft red winter wheat was 6 ½ lower, March hard red winter wheat fell 13 ¼ and March hard red spring wheat was up 2 3/4.
Soybeans Confirm a Top
Soybeans were sharply lower on Friday with the January contract down 16 ¾ closing at $10.76 ¾ and lost over 28 cents for the week.The March contract was down 16 cents and lost over 29 cents for the week. Jerry Gulke, president of the Gulke Group, says soybeans scored a bearish weekly reversal last week and this week’s lower weekly closes confirm the top is in the soybean market.
South American Crop and Biofuels Uncertainty Adds Pressure to Market
Gulke says the pressure this week in soybeans was tied to technical selling, but the market has also digested the bullish news of the China soybean purchase agreement and is now focusing on the record large South American crop.
Soybeans and bean oil also saw pressure on Friday from news EPA would not be delaying the release of the Renewable Fuels Standard Renewable Volume Obligations.Reuters on Friday reported the decision is likely to be punted into next year as EPA is still reviewing public comments on volume requirements, offering no guidance on timing. Gulke says, “It’s like that whole biofuels feed stock thing has also been kicked under the bus until maybe next summer or something.You wonder what kind of deal we made with China. What did we give away to get them to buy 12 million metric tons of soybeans?”
Large Specs Were Long Soybeans at the Top
Soybeans topped on Nov. 18 with the January contract hitting a high of $10.79 ¼ and hit a low on Friday of $10.76 3/4 a correction of 94 cents. Gulke says large speculators started buying prior to the announcement of the U.S. China trade framework and continued to add to their long position in tandem with China making soybean purchases.The delayed CFTC Commitment of Traders report as of Nov. 18 showed specs were long 163,700 contracts of soybeans at the time the market topped. “And now with the report coming out late we’re going to be caught up by the early January and we’ll probably show that the large spec beat us to the punch again, and maybe, already started to liquidate,” he explains.
How Low Do Soybeans Project To On The Charts?
With another bearish close on soybeans Friday and for the week how low will soybeans fall? Gulke says the charts project to the gap area left on Oct. 24 on the January soybeans that extends from $10.63 up to $10.70. He says this is part of the price discovery process in the soybean market.“And now we go back and say, well, we’ve got a big South American crop coming.The profitability of corn and soybeans is bad this year. We’re going to get a bridge, perhaps, but that’s not enough. The job of price discovery is to see if $10.70 is cheap enough to get farmers like me not to plant as many soybean acres next year,” he says.
Gulke says soybeans could fall to the top side of the gap at $10.70 and stop but if the gap is filled and the soybean market closes below that area it is bearish for prices.
For more information you can contact Jerry at info@gulkegroup.com.
