Futures Market Commentary for October 4th 2012 $ZS_F $YK_Foptions Xpress - Thursday, October 4th, 2012
Today's Spotlight Market
Soybean futures have seen heavy selling pressure in recent sessions, largely due to demand concerns. Some funds and large individual traders are also lightening-up their positions ahead of next week's USDA report, fearing the possibility of a surprise jump in yield estimates. The week-long holiday in China means that demand should be light and that it could take a few days for purchases to return to normal. Technically, the November Bean contract appears to have found some support above the 1500 level, which coincides with the 100-day Simple Moving Average. The heavy selling has resulted in the RSI giving oversold readings, suggesting prices could find some support in the near-term.
Soybeans have become a victim of their own success, dropping sharply after making highs in the upper $17 range. Prices have fallen back by over two and a half dollars since making those highs over concerns that elevated prices could hurt export demand. The anemic economic data from China, a major importer of US grain, coupled with some firmness in the US Dollar could negatively impact export demand. The holiday this week in China makes gauging demand difficult, as many businesses remain closed. The dry growing areas in parts of Brazil and Argentina have seen moisture, easing early concerns of possible drought conditions. Many bulls are hoping the sharp drop in prices might stimulate demand. The 14% decline in prices could be seen as excessive by a good contingent of traders who noted overbought market conditions and funds lightening-up positions ahead of next week's USDA report drove much of the recent selling pressure, not fundamentals.
Turning to the chart, we see the November Soybean contract breaking through several support levels after pulling back sharply. The most notable of these support levels can be seen at 1600 and 1570. There is additional support at 1500, but the next significant support level can be found at 1400. Yesterday's price action formed a long legged doji, which hints that the market could reverse in the near-term. Prices closed on the 100-day moving average yesterday. This could be seen as significant, as failure to hold the moving average might suggest that prices could pull back even further. On the flipside, the 100-day moving average could provide support for Beans and slow the recent selling pressure.
Rob Kurzatkowski, Senior Commodity Analyst
|Support / Resistance & Oscillators|
|Nov Bean Pivot||1486.75||1509.25||1526.50||1549.00||1566.25|
|Nov Bean Chart||1500.00||1700.00|
|Today's Highlights and Economic Data|
|Economic Report||7:30 AM Challenger Job Cuts
8:30 AM Initial Claims
8:30 AM Continuing Claims
10:00 AM Factory Orders
2:00 PM FOMC Minutes
|FND / LTD||LTD/LTO: Sep Milk|
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