Last week November 2012 Soybeans opened at $15.96½ per bushel and closed the week at $15.51½. No doubt we are seeing harvest pressure on bean prices. But what happens when harvest is over and supplies begin to drop? What everyone will try to answer over the next few weeks is “Will the South American soybean crop be enough to make up shortfalls in world supplies?”
Looking at the daily chart below, you can see Sept. 12 when the September WASDE report was released — a bullish report that had a one day affect on price action. Note that this coming Thursday, Oct. 11 we will see the release of the October WASDE report.
Technically, we see ADX at 41.9 with a slight drop over the last few trading sessions. ADX does reflect a strong downtrend as the price action came down off of $17.50. MACD is bearish, but dropping divergence from below the signal line, and Stochastics are oversold but look itching to correct. And look at the Oct. 3 price action testing $15.00. See the candle formation?
Proceed to Page 2 for the latest COT Data...
On the weekly chart, you can see how “big money” has been posturing as they have liquidated net positions over the past few months. The week of July 6, we saw Producers net short -347,864 contracts. This past Friday, Oct. 6 we saw Producers net short -243,902 contracts. Managed Money continues to liquidate net longs now 183,265 contracts net long and Swap Dealers actually added to net longs now at 44,479 contracts.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
So where will beans head after harvest? Well, first we need to get through this week’s WASDE release, which could have soybeans retest $16.00 and beyond. After that, the bean harvest will be ending over the next few weeks as we see an increase in supplies. Then all eyes will be on South America. If you trade soybeans, make sure your eyes are focused there.
Have a prosperous trading week.
To see my market views daily you can follow me on Twitter at http://twitter.com/TrendsinFutures