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Soybeans Higher on Fund Thirst

02/23/2021 | 03:47pm

By Kirk Maltais

--Soybeans for March delivery rose 1.5% to $14.08 1/2 a bushel on the Chicago Board of Trade Tuesday, with fund traders lapping up futures even as a demand rationing price point fails to materialize.

--Corn for March delivery rose 0.4% to $5.52 1/2 a bushel.

--Wheat for March delivery rose 0.1% to $6.70 1/4 a bushel.

HIGHLIGHTS

Big Gulp: Large funds swallowed up soybeans Tuesday. "Fund managers have piled into new soy length based on a bullish chart pattern of breaking out of an upside pennant," said AgResoure. "The market appears to be following chart patterns with no major change in fundamentals." Managed money funds withdrew slightly from soybean long positions according to Friday's commitment of traders report. Their net position stands as nearly 150,000 contracts long as of Feb. 16.

Still Searching: For soybeans, the market continues to plumb for a price at which strong export demand starts to diminish--otherwise known as 'demand rationing.' "The estimated cash crush margins continue to be strong and so processors are not likely to slow their crush rate at any time soon--and with ocean freight rates soaring, the costs of importing soybeans into the U.S. this summer are in the rise," said Tomm Pfitzenmaier of Summit Commodity Brokerage. No large flash sales have been announced this week by the USDA, but China is just returning from its Lunar New Year holiday.

INSIGHTS

Defrosted: The effect of a recent cold snap throughout the U.S. has been priced into futures and is no longer a key factor moving prices, said Terry Reilly of Futures International. "The U.S. cold snap is behind us and do not discount some selling to come in after corn and soybean futures traded above key psychological levels," said Mr. Reilly. Weather models are mixed as to whether there will be another drop in temperatures and snow for the Midwest in the next week, according to DTN.

On the Slide: U.S. ethanol production is expected to slide this week, a majority of analysts informally surveyed by Dow Jones said Tuesday. They think ethanol production may drop to as low as 750,000 barrels per day. If production does fall to this low end, then it will be the lowest ethanol production has been in the U.S. since late May--during the initial onset of the coronavirus pandemic in the U.S. Weather issues such as the bitter cold in the Midwest are expected to limit the number of drivers on the road in the past week. Meanwhile, ethanol stocks are forecast as anywhere between 23.9 million barrels to 25 million barrels.

AHEAD:

--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.

--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.

--The USDA will release its monthly agricultural prices report at 3 p.m. ET Friday.

--The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.

Write to Kirk Maltais at kirk.maltais@wsj.com

(END) Dow Jones Newswires

02-23-21 1546ET

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