CHICAGO, March 29 (Reuters) - Morgan Stanley is ending its recommendation to hold a long position in Chicago Board of Trade November soybean futures due to concerns that an upcoming U.S. Agriculture Department report could send a bearish shock to the market, the investment bank said on Thursday.
"The response to a bearish surprise tomorrow could be much larger than to a bullish one," analyst Hussein Allidina said in a note to clients.
Large speculators recently built a record long position in CBOT soybeans, according to Commodity Futures Trading Commission data, showing that the market is primed for a sell-off if the government report on planting and supplies comes in higher than expected, the note said.
The managed money's large net position also indicates little upside potential in the event of a bullish report.
Morgan Stanley initiated the long recommendation in November 2010, when the November soybean contract was trading at $11.31 a bushel. November soybeans were down 9-1/2 cents a bushel at $13.11 in Thursday afternoon trading.
November soybeans have risen nearly 9 percent so far this year as the market has attempted to buy acres from corn
USDA will release its prospective plantings and quarterly grain stocks report on Friday morning at 7:30 a.m. CDT (12340 GMT).
"The response to a bearish surprise tomorrow could be much larger than to a bullish one," analyst Hussein Allidina said in a note to clients.
Large speculators recently built a record long position in CBOT soybeans, according to Commodity Futures Trading Commission data, showing that the market is primed for a sell-off if the government report on planting and supplies comes in higher than expected, the note said.
The managed money's large net position also indicates little upside potential in the event of a bullish report.
Morgan Stanley initiated the long recommendation in November 2010, when the November soybean contract was trading at $11.31 a bushel. November soybeans were down 9-1/2 cents a bushel at $13.11 in Thursday afternoon trading.
November soybeans have risen nearly 9 percent so far this year as the market has attempted to buy acres from corn
USDA will release its prospective plantings and quarterly grain stocks report on Friday morning at 7:30 a.m. CDT (12340 GMT).
