Unlike corn or wheat, there is a fresh world supply in the making and just down the road in South America. The Brazil Real versus the US Dollar is held in a 1.72-1.85 trade range and nearly 20% less than year earlier levels. Foreign demand is likely to monitor these two developments and ultimately transition from US soybean supplies to South America supplies. There is at present a small build on the bullish side for soybeans as the perception within Argentina its crops are under stressed because of dry weather. At present we are cautious to such perception.
US Census Bureau Crush numbers were released yesterday and the small picture suggests that the month of December soybean crush data is bearish to old crop futures. We would agree IF you compare the actual results to the pre-release estimates. Allendale prefers to look at the bigger picture. The bigger picture says at 162.4 million bushels of soybeans crushed for the month of December, this is better than the previous months 155.7 million bushels and better than year earlier crush of 157.4 million bushels. USDA estimates a 2007/08 marketing year crush level of 1.83 billion bushels versus last years 1.806 billion bushel crush. Based on the performance of the first four months of data, Allendale suggests the crush pace may be more in line at a level of 1.845 billion bushels.
Tuesday's low of 12066 did test the short term Moving Average second level of support and did close below the first support level. By Wednesday not only has the second level of MA been violated but suggests new resistance is old support of 12120. A small chart gap remains above, between 12420 and 12350. A close below 11990 may cause psychological weakness to the daily chart to a level of 11260. The Trade Posture in Soybeans may be shifting, as we indicated on Tuesday, most vulnerable to immediate recession talk looks be the soybeans, as the South American new crop harvest is on the immediate horizon. The technical picture has turned south and fundamentals may be switching from bullish to neutral/bearish
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