Stats Canada Numbers Fuels Soybean Rally
A bullish day was had in the bean and meal market today (Soy oil was weaker due to the meal oil spreading). The fuel for the rally was the Stats Canada numbers. The trade was anticipating seeing an increase in plantings for canola as well as soybeans, instead we saw a drop in both. Expected canola planting are forecast down 7% yoy while beans area is seen down 11% yoy. This represents a miss of just shy of 3 million acres below what the trade was anticipating.
Adding to the days positive tone were thoughts that the US trade delegation that is heading to China next week will make progress in heading off the escalation of the brewing trade war with China. Technically the July meal took out the near-term trend line drawn off the winter and early spring highs and that added to the days positive tone. The July bean contract took out the 10,20, and 50-day MA and that gave the July chart a positive look and encouraged technical buying. Major resistance for the July contract will come in at 1074 which is where the near-term trend line drawn off the winter and early spring highs.
We did see weakness in the overnight market on news that India is expected to increase bean acres by 15% after the government raised the edible import tax to the highest level in the past decade. Last year they planted 10.6 million hectors of soybeans. With the funds long beans and soymeal, we would look for the market to try to extend today’s rally Monday as the funds trying to window dress their position on the last trading day of the month. We continue to carry a bearish bias of the bean market for the long term.
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