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NEAR-TERM MARKET FUNDAMENTALS: Wet harvest weather remains a concern with some traders saying this factor has now surpassed frost worries as the main threat to the soybean crop. Forecasts remain clear in the Delta and mid south over the short term with rain expected in the Midwest later this week. Traders report that the rains to date have been enough to keep soybean supplies on the tight side. The rains that are forecast for later in the week are expected to move mainly into the western soybean belt with potentially heavy amounts coming in west central growing areas. This has supported nearby soybean contracts in recent days according to traders, with one analyst noting that the fast pace of maturation in soybeans over the past two weeks is counteracting the support provided by a late harvest. In fact, the soybean crop may soon catch up with and surpass the much slower-developing corn crop. The weekly crop progress report showed the harvest only 5% complete compared to 8% last year. The 10 year average for this time of year is 17%. The highest percent complete was 27% in 2000 while the lowest was 3% in 1996. However, the report also showed that the crop is advancing quickly, with 63% of the crop dropping leaves, up from 40% the previous week but still behind the 5-year average of 77%. The current rate is close to a year ago, when 65% of the crop was dropping leaves. Minnesota showed a large increase, with 81% dropping, up from 49% the previous week. The crop is rated 66% good/excellent compared to 67% last week and 57% last year. Chinese demand for US soybeans is still in evidence despite continual predictions of lower demand from China in coming weeks and months. The USDA announced a sale of 225,000 tonnes of soybeans to China for 2009/10 yesterday. This week’s export inspections for soybeans were again disappointing at just 7.427 million bushels. While this total is up from last week’s extremely low total of a revised 0.732 million bushels, it still falls far short of the 26.678 million bushel average inspections needed each week to meet the USDA’s soybean export projection for the current marketing year.
TODAY’S GUIDANCE: With the percentage of the soybean crop that is dropping leaves likely to soar past 80% by this time next week, a hard freeze is becoming less and less of a threat. Rain may now be a bigger threat than frost, and the combination of a lower dollar and rain in the western Midwest harvest areas could provide enough support to send the soybean market higher. However, if we do not see this one-two punch in coming days, look for a continuation of the downtrend. Traders should push any new sell orders out to the more deferred March soybean contract in case harvest delays keep near term supplies tight. First support in the March soybean contract is near 912 1/2 with the next support at 888. First resistance is near 935 1/2 and then near 946 1/2.
