MarketsFarm — Soybean contracts on the Chicago Board of Trade tested contract highs around US$12 per bushel in overnight trade earlier in the week, but couldn’t maintain those levels due to a lack of support.
A technical selloff put pressure on prices on Wednesday, with the nearby January contract closing down by nine cents at $11.53 (all figures US$).
Scott Capinegro of Barrington Commodities at Barrington, Ill., attributed the selloff to reports of rain forecast for key soybean-growing regions in South America.
“We’ll have to sit back and see if these rains develop in South America,” he said, noting if they were “nothing spectacular” then some ground could be regained.
“We could give back at least half of the break,” he said.
After going on a buying spree earlier in the fall, China has been largely absent from soybean export activity lately. Last week, there were rumours that China cancelled shipments of U.S. soybeans due to low crush margins.
“You’d like to see China buy something again,” Capinegro said.
Weakness in the U.S. Dollar Index has provided some support to commodity prices, as the dollar hit new lows for the December contract.
“Down the road, that should be supportive,” he said.
Market participants will continue to keep a close eye on weather forecasts for North America, as well as Chinese buying interest.
“It’s possible [China] is trying to play the game and not buy beans for a bit, to see if they can break the market on that.”
— Marlo Glass reports for MarketsFarm from Winnipeg.