Bearish pressure on beans is rising. In fact, it is a surprise to analysts at OCBC bank that soybeans have not cracked under that pressure. With the Brazilian harvest almost done, ICE prices may see sell-off.
Bearish pressure persistent
“We estimate that the Brazil harvest is about 85% done as of last week. While that is still way behind the average, in pure tonnage terms the amount of Brazilian beans harvested is already at a record high, which should continue to add pressure on American bean exports. That brings us to our last point – US soybean exports was again paltry last week at 12.7mil bu.”
“More worrying was the net cancellations of fresh orders from China of 7.9mil bu, presumably on the back of export pressure from Brazil. Against such a bearish environment, it is perhaps surprising that ICE soybeans have yet to materially correct downwards.”
“$14 appears to be the crucial support for ICE soybeans – if that is broken, we may see a quick unwinding of long positions.”