The Chicago Board of Trade soyabean market closed sharply lower on Tuesday after massive technical selling surfaced, with prices blowing through key support levels, traders said. New-crop November soyabeans fell nearly the 50-cent trading limit for the second straight day, down as much as 47-3/4 cents.
Easing US crop weather concerns as cooler temperatures fuelled the two-day sell-off and some rains were forecast to move through the parched US Midwest. Sell-stops were triggered all the way down, with commission houses liquidating long positions, traders said.
"The margin calls and the technical are the dominant issue," said Don Rose, an analyst with US Commodities. Traders caught with long positions were forced to liquidate as the Soya market declined by nearly $1 in the past two days.
"On the upside we probably had too much risk premium dialled in. We know that soyabeans are a crop of August," Rose added. August is the yield-determining month for soyabeans.
That is when the crop sets and fills pods. In contrast, July is the key yield-determining month for corn as it pollinates. Old-crop July closed 27-3/4 cents per bushel lower at $6.66-3/4 and new-crop November was 29-3/4 cents weaker at $6.86.
November slid through its 20- and 40-day moving averages, holding just above its 50-day MA at $6.61-3/4. End-user pricing helped bring the market off its lows.
Commercials took advantage of the break to price soyabeans. Funds were net sellers of roughly 12,500 lots, traders said. Cooler temperatures were expected to move into the US Midwest later this week but conditions should remain sizzling through on Wednesday, continuing to stress corn and soyabeans, said Joel Burgio, Meteorlogix forecaster.
Rains will also move through the Corn Belt, but the amounts in the parched eastern Midwest will remain light.
Traders were waiting to see how much of the forecasted rain falls on central Illinois. The heat was stressing the US bean crop, which was reflected in the USDA weekly progress report released on Monday.
USDA said 59 percent of the US soyabean crop was rated good to excellent, down from 63 percent last week. Traders expected the drop. But ratings were sharply lower in the top Soya State of Illinois, with 33 percent of the state's soyabean crop rated well to excellent, compared with 46 percent the week before.
Midwest cash basis bids for soyabeans were steady to firm on Tuesday and farmer sales were hushed. Export business stayed light, with importers looking to South America for soyabeans.
Taiwan sealed a deal for 58,000 tonnes of Brazilian soyabeans. The Soya product markets were also lower amid fund long liquidation, following the weakness in soyabeans.
Funds sold about 7,000 meal lots, with Reface selling 4,000 December, and 4,500 Soya oil lots. July soyameal settled $8.30 per ton lowers at $207.10, with the deferred $1 to $10.20 lowers.
US cash soyameal markets were also soft as customers were sidelined, waiting for prices to keep falling. July Soya oil was down 0.35 cent at 24.17 cents per lb., with the deferred 0.30 to 0.40 cent lower.
Malaysian palm oil futures ended down in volatile trade, with benchmark September falling nearly 2 percent after the soyabean complex tumbled on outlooks for cooler weather.
Comments
Comments are closed.