CBOT soy futures eased on Friday on pre weekend harvest hedge selling. Soybeans rallied a sharp $.40/Bu following the USDA September crop report on end user pricing and short covering. November soybeans failed to exceed resistance at $9.80, but the market did forge a weekly upside reversal. This will be noted by fund managers early next week. Traders/fund managers are not believing of USDA’s September soy yield of 49.9 BPA amid record soybean pod weights. They argue that unlike recent years, the acute Midwest dryness limited top pod formation/fill.
Managed money is net short just over 4,000 contracts of soybeans, net short 32,000 contracts of soymeal and long a record 100,000 contracts of soyoil. The huge fund soyoil length is a market risk, but cash soyoil basis continues to improve on sliding US stocks and strong demand from biodiesel producers. A modest correction could occur, but we doubt that Dec soyoil can drop below $.335.
Soybeans closed higher for the 4th week in a row and forged a bullish revesal. Midwest soybean yield data and South American weather will drive CBOT price action into early October.
