USDA forecast does not give much wood to new highs

Analyst reports the oscillations of prices on the Chicago
by Peter H. Dejneka , Chicago - Special to Globe * Rural

( From 11h40 on Thursday Chicago traded more than 1,000 contracts per minute - GettyImages )

Numbers by themselves are " neutral " , and bass for soybean and maize. The market reaction is that interessante.Tivemos was the strong presence of funds in soybeans from 11:40 , Chicago time , 40 minutes after the report . Prices fluctuated quite mild - 24 of 26 minutes operated from 11h40 had volume above 1,000 contracts per minute , with clear presence of funds.

The " chat " here for this reaction is that after having had the opportunity to digest the report , several participants are " wavering" estimate soybean - because they do not agree with the estimates for Indiana , Iowa and Illinois . They find that the estimates were too conservative for these states , which suffered the driest August in more than a century . Thus, the discussion here was that for this reason it is expected to lower income announced in the coming weeks .

I do not necessarily agree with this argument and I think those who are saying this is not taking into consideration some factors : 1 - The resistance that the new seeds are under stress, as evidenced by the production well above the expected last year ; 2 - the fact that even with the drought , much of this region joined in planting with very satisfactory levels of soil moisture (unlike last year ) and 3 - were the plants need heat to help in its development , after a month of July with temperatures well below of normal .

Another factor that was quite clear today was the performance of participants in the spread soybean / corn - which reached a ratio of 3x1 today - which in my opinion, is very close to a " top " technical . This afternoon a reporter asked me, " but Peter , so we know how to keep this relationship soybean / corn to soybeans will pull corn or vice versa ." My answer was - " if you were a speculator in the market today , what reason would you have to buy corn , especially after the data today ? " . Ie see the reaction today as technical and temporary and believe that we have a realization in soybean prices in the coming weeks .

Reasons: 1 - The physical market premiums are under pressure with the onset of harvest; 2 - It is very difficult to maintain a bullish trend during harvest American ; 3 - The market may even try to raise the November contract above the historic high and strong technical resistance of $ 1,409.75 , failing to go beyond this point and keep up - it's very clear indication for strong technical achievement ; 4 - rain scheduled for next week may also help certain areas will mitigate losses and to increase production soybeans.

Now the market's attention turns to the announcement of update deserted area on Tuesday next , for the climate here in late season and early season there and also the data that the harvesters will begin arriving in the coming weeks . Not forgetting that we report quarterly stocks at the end of the month and also a new and important USDA October report . Volatility should continue - at least until mid-October ... but do not believe today's report gave enough firewood to the market to seek new high to be maintained . We'll see.

* Peter H Dejneka is director of PHDerivativos

Source : Globo Rural magazine