We are going short 1 Soymeal contract (ZM) @ 268.8
Stop is a close above 269.8
Target is @ 244.8
The short-term positive news in the market appears to be temporary in nature and traders see the possibility of larger than expected plantings for all crops this spring if the weather permits. July soybean selling resistance comes in at 966 with 940 3/4 and 893 as support. July meal selling resistance comes in at 265.90 and with 246.60 as next downside objective. July oil buying support is back at 38.58.
The outlook for a steady flow of new crop soybeans on the world market along with weakness in the energy markets helped to pressure soybeans overnight. Traders were surprised with the strong gains in soybeans and the complex yesterday with July soybeans jumping 40 cents off of Monday's lows. Some shipping concerns in Brazil and ideas that Argentina producers may be unwilling to sell soybeans at a cheap level helped to spark aggressive short-covering and new fund buying yesterday. Southern Brazil looks wet over the near-term but dryness from Parana north should help boost harvest activity into early next week. Argentina rains should slow early harvest but could be seen as beneficial to late filling crops. There was more discussion about shipping delays at Brazilian ports but some sources are indicating that the delays are minimal at the port of Santos and well within the normal range at the port of Paranagua. Basis levels at the Gulf were mostly steady to lower yesterday due to slowing demand. Meal posted a moderate gain on oil, continuing the sharp correction that began on Monday. Key growing areas in Malaysia are expected to see lower palm oil production ahead due to dry weather with production cuts of 10-15% noted as a possibility in the impacted areas. Traders are also keeping a close eye on dry conditions in parts of China. Japan has turned more to China for meal imports due to higher prices and a tighter supply out of India this year. Massive imports of soybeans by China have left meal supply high. Traders continue to discuss snowmelt flooding issues in the northern Midwest and the early melt may give the ground time to dry ahead of planting season. However, cold and wet weather returns to the Midwest early next week and again later next week and an active weather pattern looks to persist through the end of the month. Traders will keep a close eye on weekly export sales news today after last weeks 8-year low in soybean sales due to cancellations from China.
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High Risk Waring: Futures and foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade futures or foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with futures and foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.