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NEAR-TERM MARKET FUNDAMENTALS: The emergence of heavy deliveries against the May soybean contract yesterday and more today combined with a move to a new one-year high in the US dollar are seen as negative forces. Cold and wet weather in the forecast and the need for some replanting in the southern Midwest region which was hit with flooding rains over the weekend should slow the planting progress next week but this week’s weekly update showed the crop off to a fast start. The weekly planting update showed 15% of the crop was planted as of Sunday compared to 5% last year. The 10 year average for this time of year is 9%. This matched the highest percent complete from 2000. The Argentina Agriculture Minister indicated that 67% of their soybean crop has been harvested so far. There are still no shipping delays from the Gulf of Mexico but traders will monitor the situation closely in the days ahead. With the high dollar and freshly harvested soybeans in South America, buyers don’t need much of a reason to switch to other sources. Brazil exported 4.913 million tonnes of soybeans in April which is up from 3.086 million tonnes in March and up from 4.493 million last year. Meal exports totaled 1.122 million tonnes from 1.148 million in March and 1.296 million last year and soyoil exports came in at 110,800 tonnes from 62,000 in March and 162,500 tonnes last year. A wetter pattern seems to be developing ahead but the year so far has seen just 5.6 inches of rain in Chicago as compared with 10.47 inches last year. In addition, the market faces a much colder than normal trend for late this week into next week. South Korea bought 100,000 tonnes of non-GMO soybeans for Jan-May 2011 delivery. This week’s export inspections for soybeans were 7.2 million bushels, just below the 7.9 million bushels that are needed each week to reach the USDA’s export forecast for 2009/10. This was the lowest weekly shipment number since September.
TODAY’S GUIDANCE: The market looks to come under increased selling pressure with a strong dollar, slowing exports, big deliveries and enormous crops just harvested in South America. Keep in mind, world ending stocks at the end of the 2009/10 season are expected to increase 47% from last year to 62.96 million tonnes. This is the second highest on record. Meal short-term demand still remains strong but this may ease soon. Technically, the market turned down last week with a closing price reversal, a penetration of the uptrend channel of the April rally and follow-through selling this week. The lowest close since mid-April could also attract increased technical selling.
TODAY’S MARKET IDEAS: July soybean selling resistance moves down to 997 3/4 with some light support at 981 3/4 and then 970 as next support. Use 958 1/4 as an additional key support level. July Meal selling resistance comes in at 289.10 with 282.60 and 278.20 as next objectives.
