by: Bill Reavis
15th February, 2012
Last week's bean commentary focused on soybean's 1246 resistance level and prospects for pushing higher. As of 10:30 AM EST Wednesday, soybean March contract had reached a high of 1269. ( CME data feed).
In Monday’s USDA weekly, export inspections report, beans were at 38.5 million bushels, up one million from the week prior and three million more than a year ago. The majority of the exported crop will be allocated to China; as happens there is a meeting today in Washington between President Obama and the Chinese Premier. They are discussing the new grain trade agreement. Last year's meeting led to an announcement upon completion that we sold China a single record 4 million metric ton soybean purchase for delivery in this year's marketing season. ( Bloomberg, 2/10/12). In the three prior years were announcements of lesser totals, for immediate delivery, and not seasonal-based delivery. An immediate delivery has a much more drastic effect on price movements.
However, in spite of the friendly impending announcement about a Chinese purchase of U.S. soybeans, it was a weather report for South America that ruled this week’s trading action. The forecast called for a heat dome (that entered over the weekend into Brazil and Argentina) to last until next week (Dow Jones News Wire, 2/10/2012). This bullish weather news pushed beans up 23 cents, as 40% of the beans in those nations are still developing the pod. (CME data feed). Beans lifted corn and wheat along in spillover buying.
Both the Survival Plan and Diversified Commodity Basket are long soybeans.
Soybean Chart
Regards,
Bill Reavis
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