March soybeans were down 13 1/4 cents late in the overnight session and fell to their lowest level since December 23rd. China futures were down slightly. Malaysia palm oil futures were slightly higher, led by the surge in energy prices. Outside market forces look mixed with increased uncertainty over North Africa tensions providing support to some markets, but a turn higher in the US dollar and sharply lower equity markets may have sparked a long liquidation trend in many commodity markets, including metals. Meal was weaker in Europe on Monday, and soybeans saw volatile trade overnight with March soybeans moving from as much as 17 3/4 cents higher to sharply lower late in the overnight session. Ideas that the COT report showed an overbought condition plus improving crop prospects for South America have helped spark some long liquidation selling recently, and traders appear somewhat concerned that the USDA outlook conference will increase planted area for the coming year. These factors have sparked the selling with open interest already down 49,816 contracts from the February 10th peak. Libya is not seen as a significant consumer or producer of commodities, for except crude oil, and the political events of the weekend sparked a surge in risk premium in energy markets. March soybeans closed 36 1/2 cents lower on the session Friday and down 48 cents for the week. News that China raised interest rates to fight inflation plus talk of a large Brazil harvest ahead helped to pressure the market early. While Chinese leaders are exploring the idea of lower soybean and soybean oil import taxes, traders see the potential for action as weeks away, and the rumors provided only temporary support. There are concerns that China might cancel more old crop soybean sales with the US, but a firming tone to outside markets with a jump in metals and energy markets on Friday and a continued strong tone to equity markets helped support the bounce off of the lows. There are rumors that China bought four cargoes of soybeans from Brazil and three cargoes of soybean oil from Argentina. Traders see good weather in Argentina over the past few weeks as reason to suspect improving crop conditions ahead, but too much rain in Brazil may slow harvest progress. The Commitments of Traders reports as of February 15th showed non-commercial traders were net long 157,812 contracts, a decrease of 30,796 contracts for the wee. This is an aggressive selling trend from funds coming off of a near record net long position the previous week. Commodity index traders held a net long position of 174,303 contracts, down 6,958 for the week. For meal, non-commercial traders were net long 35,398 contracts, a decrease of 11,636. Non-commercial and nonreportable traders combined held a net long position of 57,775 contracts, down 15,263 contracts for the week. The spec selling trend is seen as a negative force. For oil, non-commercial traders were net long 64,745 contracts, a decrease of 24,116 contracts for the week. The aggressive selling trend is seen as a short-term bearish force. Commodity index traders held a net long position of 98,722 contracts, up 2,814 contracts for the week. In their semi-monthly soybean sales overnight, China sold just 6,106 tonnes of the 299,072 offered.
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