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170531

Sideways Trading Pattern to Continue, Analyst Says

Soybeans ended Friday’s session in the middle of a rather wide daily trade range, settling 6½¢ higher for the day. For the week, the market gained 5¾¢ while trading in a 37¢ range. Friday’s strength was derived from strong weekly export numbers as well as spillover strength in the corn and wheat market. Corn and wheat are being driven higher by fund short covering. 

Soybean sales through last Thursday came in at 1,417,796 metric tonnes. This was viewed supportive as it was above the 900,000 to 1,200,000 tonnes the trade had been expecting. The USDA’s current export goal is 2.025 billion bushels. This would be a new record and 25% over the five-year average. Year-to-date sales are currently 19% over the five-year average. Over the past four weeks, the pace of sales has been making up for the slow pace we had earlier in the year. Sales are now running 31% over the five-year average.

This recent sales pace needs to continue to justify the USDA’s current goal. We would look for the current sideways trading pattern to continue as ideas that big crops will be getting bigger will offset strong demand for the beans we are seeing. Producers should be active sellers on rallies toward the $10.00 level while end-users should increase coverage on moves to the $9.00 level.

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