Bad News from USDA and Wall Street Punishes Soybeans
Beans had nowhere to hide from liquidation.
Bryce Knorr
Published: Oct 6, 2008
The government moved to bailout Wall Street last week, but not before delivering a gut punch to the soybean market. Already under pressure from the chaos in the financial markets, beans suffered from a disastrous stocks report. USDA finally admitted it had grossly overestimated the size of the 2007 crop, adding 91 million bushels to its production estimate, raising Sept. 1 old crop carryout to 205 million bushels, 65 million more than its last estimate.
Coupled with ongoing liquidation by hedge and index funds as investors fled commodities like a city with the plague, beans had no place to hide. November futures fell to a key support line below $10, but broke through the uptrend line from 2006 on the nearby chart, a very negative performance indeed.
Barring another surprise from USDA in Friday's monthly supply and demand report, the market should remain fixed on Wall Street until volatility begins to subside.
In the meantime, trying to view the landscape from a bomb shelter is difficult. The good news is that demand appears to be decent. To read Bryce Knorr's complete weekly soybean review, click HERE.
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