The lazy trading has now begun to give way to moderate selling in the soybean market. Still, this controlled, significant selling is good for trading. Excellent trading conditions!
One of my favorite news websites is reporting that traders are reducing their positions in anticipation of the USDA crop acreage report next Monday, March 31. Perhaps the lower volume overnight and in early trading today is in anticipation of Monday's report.They are also reporting that the new margin requirements begin at the end of today's trading session. They are also reporting that limits will increase tonight for both beans (new limit is 70 cents) and corn (limit expanded to 30 cents). This is significant, because it suggests that the increased margins have less to do with credit tightness, and more to do with expansion of limits to allow accurate market price disclosure. I see this as a very positive event, because accurate price discovery is beneficial for traders, I believe. The large number of limit up and limit down days in recent months have made it more difficult for day traders like me. The increased limits will help, I believe. Traders will be wise to take note of these developments.
Monday is also the end of both the month of March and the first quarter of 2008, so this may be a very busy day. This will probably have an impact on large fund trading, so strong, rapid movements should be expected.
The farmer strike in Argentine continues, lending more sales to American soybeans. This event is also significant because it underscores how geopolitical events can affect futures prices, and it emphasizes the supply concerns of tight global grain stocks.
Lastly, an emergency closure of the Mississippi above St. Louis is having an impact on cash sales, and thus, prices. This also tends to affect futures prices to some degree.
