Soybeans focus: China purchase and upcoming harvest
Head of Commodity Strategy
Summary: Soybeans have struggled to break higher despite aggressive goodwill buying from China ahead of the resumption of trade talks in October. Apart from trade the upcoming harvest will increasingly be attracting attention.
Ahead of the U.S. harvest where potential frost scares may provide some support before the actual yield becomes known the market has once again been left focusing on the upcoming trade talks. Reuters report that China will buy another 6 million tons ahead of the new round of talks next month. According to data from Chinese Customs some 1.6 million tons of soybeans was imported during August, more than the previous two combined. Overall however the past 12 months has seen imports slump by 68% compared with the previous 12 months period.
With these latest developments in mind it is quite disappointing that the price of November soybeans, the new crop futures month, has not managed to rally more than it has during the past couple of weeks. It highlights the fact that while China is currently doing goodwill buying a trade deal still hangs in the balance and with that the risk of trade relations turning south once again.
The chart shows that ZSX9 has found support at the 50-day moving average at $8.81/bu while resistance can be found at $9/bu, a psychological level as well as the 50% retracement of the June to September sell-off.
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