The soybean market today closed out at more than 60,000 contracts waiting to be sold. This is an almost certain assurance of another instantaneous lock limit down when trading resumes Sunday evening. The CME is attributing this to the following:
- Brazil's soybean crop is expected to be higher than earlier estimated.
- Argentina's soybean crop is expected to be higher than earlier estimated.
- China has announced that it will release soybean oil in storage for sale into the global marketplace.
If we see a similar scenario played out in the soybean market that we saw a few weeks ago with wheat, possibly lock limits will be expanded, and margins would therefore also have to be increased. If this occurs, panic will spread as traders and large funds seek to liquidate their positions. Brokers will be forced to liquidate trader positions also to raise funds due to margin calls. This, in turn, will accelerate price action downward. Once this is achieved and all the shorts are stabilized, prices will rocket back skyward as new positions are reestablished in soybeans at bargain basement prices. It will be an interesting week for soybean traders next week. I'm glad I liquidate all my positions each day.
