Glacier FarmMedia | MarketsFarm—Optimism over increased Chinese demand along with weather concerns in Brazil gave the Chicago soybean market a boost and triggered some fund short covering over the past week, but the futures will likely face stiff resistance to the upside going forward.
November soybeans settled at US$10.5325 on Sept. 25, gaining about 50 cents over the past week. New stimulus measures announced by China provided the catalyst for the rise, with dryness concerns in Brazil contributing to the strength, according to Scott Capinegro, hedging strategist with AgMarket.net.
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The November soybean contract moved above both its 20- and 50-day moving averages during the rally, and Capinegro placed the next upside target near the 100-day average around US$10.80 per bushel. However, he cautioned that the market “could turn on a dime,” especially if moisture conditions improve in Brazil and China cancels U.S. purchases and shifts more of its demand to South America.
Soybean seeding in Brazil is off to a slow start due to dryness, but it usually takes until mid-October before the bulk of their crop is in the ground. If the rains are still lacking by then, there could be a reason for soybean futures to move higher, said Capinegro. Although he added that export sales were already difficult at current prices, “if we rally to US$11, how much business can we do?”
Corn also found some strength on the back of China’s stimulus measures but held in a sideways pattern overall. Capinegro placed the December contract in a range between US$4.00 to US$4.25 per bushel, with any move to the upper edge of that range likely encouraging farmer selling.
