The main driver of higher soybean prices is that funds are investing in soybean oil and palm oil futures. Other reasons are that India suggests that its rapeseed crop will be down 15% as a result of poor weather. China on the other hand anticipates its oilseed plantings will be up 7% in 2008 to meet rising demand. Weather for Brazil and Argentina is viewed as beneficial to both crop development and harvest. With 50% of the 2008 marketing year remaining, weekly soybean inspections on Monday were three times more than needed on a per week basis in order to meet the USDA final export target of 1.005 billion bushels.
Technically, July soybeans have immediate technical support at 15150, with resistance at 16000, and the technical trend is up. November futures have technical support at 13960 and resistance of 14750, with its technical trend up as well.
Allendale is bullish to soybeans, soybean meal and soybean oil futures based on firm fundamentals and upward technical trends. As outlined within our Grain Trading Strategies page, Allendale is willing to buy soybeans, soybean oil and soybean meal on a technical correction.
For the month of February, May soybean futures value increased 18.8%, May corn futures value increased 8% and July CBOT SRWW value increased by 14.5%. By comparison, April crude oil futures value increased by 11%.
When looking at the first two months of 2008, the DJIA has lost 10% of its value, while the following have gained in value with corn up 21%, soybeans up 26%, wheat up 21%, soybean meal up 15%, with soybean oil up 40% and crude oil up 6%.
When looking at these values, it may be easier to understand how major investments funds are willing to tout the strong return on investments in grains, oilseed and their products compared to investing in stocks. New money will continue to flow into commodities as long as technical trends continue onward and upward.
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