Morning markets: will soybeans make it back to $15 a bushel?

Can Chicago soybeans make it back over $15.00 a bushel for the first time in a month?

That is one of the key technical levels that investors are looking out for, to indicate if the oilseed's 9% rebound from a multi-month low reached in mid-November has legs.

"A close over $15.00 a bushel for the January or March contracts would look bullish on the charts," Mike Mawdsley at Market 1 said.

Brian Henry at Benson Quinn Commodities said: "There may be some buy stops in soybeans, if the Jan trades above $15.00 a bushel," if adding that "a better round of buy stops is just above the $15.10 price level".

And at RJ O'Brien, Richard Feltes noted that the oilseed "tends to rally" ahead of US Department of Agriculture Wasde crop reports, the department's flagship monthly briefings, a historical trend "which suggests a potential rebound to the Fibonacci retracement level of the $15.30-a-bushel area in a bid to slow demand".

Battle line

However, ahead of such heights lies a battle with the 50-day moving average, which January soybeans have not closed over since September, and which the lot was grappling with in early deals on Friday.

The contract retook the average, at a little over $14.96 a bushel, at one stage before retreating to $14.94 a bushel as of 08:55 UK time (02:55 Chicago time), a gain of 0.3%.

Behind all the technical talk, the oilseed has gained a head of steam from fundamental factors, with US weekly export sales of the oilseed topping 1.1m tonnes in the latest week, data on Thursday showed, well ahead of market expectations, besides the rate needed to meet USDA full-year forecasts.

Indeed, they were five times what is needed to meet the USDA estimate.

"China was said to have acquired up to six cargoes from the US this week and is set to seek more in the coming weeks," Lynette Tan at Phillip Futures, in Singapore, said.

Argentine woes

Meanwhile, US demand is said to remain firm, buoyed by revivals in values of soymeal and soyoil, the products made from processing soybeans.

Soymeal, whose export data were also strong, gained a further 0.2% to $451.50 a short ton for January delivery, with January soyoil flat at 51.20 cents a pound.

(This time, palm oil managed to close its discount, adding 1.0% to 2,318 ringgit a tonne in Kuala Lumpur, as investors covered short positions ahead of data next week, which are expected to show Malaysian inventories at a record high, and so have been depressing the market.)

Argentine slowdown

Soy complex prices are also being helped by the poor conditions besetting farmers in Argentina, the top soyoil and soymeal exporter, as they try to get soybeans sowed, and contrasting with improving hopes for Brazil.

Latest data showed Argentine growers running behind by an area the size of Belgium, with rains holding up sowings.

"It is interesting to note that our lead Argentine crop contact is pegging the corn crop in the 24m-tonne area, down 4m tonnes from the USDA, and soybeans at 51m tonnes, down 4m tonnes from the USDA as well," Richard Feltes said.

Michael Cordonnier, the noted crop scout, has pegged the Argentine harvest at 22.5m tonnes, warning that flooding means "some fields are not going to be planted".

'Exports have to be watched closely'

Not that Argentina's hiccups are helping corn much, with the grain continuing to suffer from poor weekly US export sales, which came in at some 50,000 tonnes, a fraction of expectations.

"US exports have to be watched closely as it is likely to be the key indicator for market movements from now till late January next year, when a clearer picture of output for corn and soybean in Brazil and Argentina becomes available," Lynette Tan said.

Another factor regaining attention in the corn pit is the price of crude, which corn is linked to as a raw material for bioethanol plants, and whose decline in the last session was seen as one of the reasons for the grain's lower finish.

But while Brent crude rebounded 0.3% to $107.28 a barrel, corn remained overshadowed by the export data, and eased 0.2% to $7.49 a bushel, a level which seems to have acted as something of a magnet of late.

'Prices still high historically'

Wheat has found a level too, at the bottom of a price corridor it has trod since the early summer.

"Wheat, despite record low US winter wheat ratings and the shortfall in 2012 former Soviet Union wheat production/exportable surplus,  is hugging the lower end of a six-month descending channel," Mr Feltes said.

Investors know "full well that current prices are still high historically, and thus capable of sparking a rebound in 2013 northern hemisphere wheat production".

And are they high enough too to be choking off demand? Certainly US export sales, while not dismal, have not been as buoyant as many had hoped (although the European Union has enjoyed its best week in two years for wheat shipments).

"Our prices are getting down to levels that are competitive or even cheaper than other countries," Market 1's Mike Mawdsley said.

"But we need to see that demand show up every week at this point."

March wheat did its best to make itself more appealing by easing 0.4% to $8.58 a bushel.

Weaker softs

Among soft commodities, New York raw sugar maintained its downswing of the previous session, falling 0.3% to 19.30 cents a pound for March, pressed by ideas of the world production surplus in 2012-13.

Vietnam did little to help bulls by tripling its import duty on the sweetener to 40%, citing strong domestic production, expected to reach 1.5m-1.6m tonnes, and outpace annual demand of some 1.3m-1.4m tonnes.

New York cotton for March eased 0.3% to 73.34 cents a pound despite Indian arrivals of the fibre falling 18.5% so far in 2012-13, Cotton Corporation of India data showed.

Evening markets: 'terrific' US exports lift soybeans, again
Agricultural Commodities
Agricultural Markets
Agricultural Companies
Agricultural Events