Cattle-on-Feed report meets expectations
Soybeans: Another strong day today in the bean market is turning many bullish. We are in no place to argue, especially with China buying US beans aggressively again.
Beans have traded between 1030 and 1050 through most of the week which is comparable to what we saw in early August. At that time, we traded up to or slightly above 1050 four times before the overnight ran it up and the day session took it all way and then ran it down for three days. After that three day sell off, beans had lost nearly a dollar of value. What this shows us for upcoming prices is that we have struggled here before. A move and a settle above 1050 will look strong but a move above 1060 would be much more significant. A close above 1060 will open the door to even higher trade. That trade will need to be backed up by continued strong China demand as that is the last fundamental factor strong enough to allow for trade this high. While we can not argue China offers good support, it is yet another factor that can end at any time, without warning, and while being bullish may be warranted it must be done with caution. Those bullish in August were quickly shown the door so let's make sure we do not repeat that this time without fore warning. Today, saw another strong close but yet again did not manage to close above 1050. As mentioned, that will be the level we need to close above to continue a bullish mentality. Bulls are relying on fund spec buying and China. Let's go ahead and look for higher prices but have our stops close.
Direction: Next resistance is 1068. Key support is now 990. Buy against support but fundamentally we will want to be short if support fails to hold. Farmers should be using 3-way option plans to lock in revenueâ€¦Ryan Ettner
(11/20) Buy Jan 1054 stop, risk 17 from entry, objective 1070. (This will change again Monday afternoon.) Option Strategy(s): (10/08) Bought Mar 920 put, sold 1020 call, sold 800 put for 10â€¦producer idea. There is margin required with this, but you are in a position to make 120/bu if the market breaks while leaving a 100/bu upside open before you are locked into a short. (11/16) Sold March 1140 call 26 1/2, risk to 42, objective 0. Closed 38 1/4.
Allendale's Rich Nelson will utilize fundamental and technical indicators to provide a full 2010 outlook for the soybean market at Allendale's annual conference.
***Disclaimer*** The commentary and trades below are derived from technical indicators provided in our Allendale Advanced Charts pages and may not correspond with the fundamental commentary above.
Soybean Technical Commentary: Beans have bumped up against the key psychological level of 1050 the past 3 sessions now. Today's close was near it though, so it may only be a temporary hurdle. We will stand aside for Monday.
Vital Technical Indicator: the next projected major turn day for soybeans is November 25, soybean meal is November 24, and soybean oil is November 27.