Soybean Futures Expected to Open on the Defensive

Strategic Insights -

Soybean futures on the Chicago Board of Trade are expected to open on the defensive on Wednesday morning, with losses of 1 to 3 US cents per bushel possible. The market is experiencing overbought price sentiment and weakening cash basis levels due to increased farmer movement. The absence of fresh export business and losses in e-CBOT activity overnight have added to the bearish price sentiment. However, concerns about cold temperatures in the US Midwest and strength in Malaysian palm oil futures are seen as mildly supportive for soybean values.

Key Takeaways:

  • The Chicago Board of Trade (CBOT) soybean futures are expected to open on the defensive on Wednesday morning due to overbought price sentiment and weakening cash basis levels.
  • Farmer movement is contributing to the weakening cash basis levels, leading to bearish price sentiment.
  • The absence of fresh export business overnight has added to the bearish price sentiment.
  • Concerns about cold temperatures in the US Midwest are providing underlying support for soybeans.
  • Strength in Malaysian palm oil futures is mildly supportive for soybean values.
  • The November CBOT soybean contract closed near the session high on Tuesday, a fresh six-week high, giving the bulls a near-term technical boost.

Statistics:

  • Losses of 1 to 3 US cents per bushel possible for soybean futures on the CBOT.
  • Overbought price sentiment is contributing to the expected losses.
  • Weakening cash basis levels due to increased farmer movement.
  • 4-month old downtrend line in place on the daily bar chart.
  • Close above $6.30 a bushel would begin to penetrate the uptrend line.

Sources:

  • Resource News International via COMTEX
  • Chicago Board of Trade (CBOT)
  • Malaysian palm oil futures
  • e-CBOT activity
  • COMTEX (http://www.comtexnews.com)