Was that the High or just a Correction in Soybeans?
Dec 07, 2017
TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
After new recent highs earlier in the week soybeans have pulled back on a wetter forecast for Argentina in mid December. Soybean meal, which had been pulling the soybeans higher has also pulled back from contract highs. So is the party over for soybeans? Or is this just a technical correction before going higher once again?
Soybeans had managed an over 80 cent rally off of the August 16th low but have given back more than 20 cents after failing to break out over the mid-October highs. Much of the strength has come from dryness concerns in Argentina and a long term La Nina forecast (which can mean a warm and dry growing season for Argentina). However, to this point Brazil looks good and it is very early in the Argentinean growing season with soybeans just over 50% planted and corn roughly 40% planted. With a little more rain in the forecast for Argentina the soybean rally has lost some steam.
Much of the recent strength in soybeans has come from soybean meal. The March soybean meal is also well off the mid-August low but in early November was looking flirting with a breakout to the downside. However a big reversal on November 17th had sparked upside follow through to new contract highs before selling off. With the soybean meal pushing into overbought territory and leaving nearby chart gaps to fill this was a likely area for a profit taking correction.
Sign up for our Morning Ag Hedge newsletter! Sign up here: http://www.zaner.com/landing/ag_hedge_newsletter.asp
There is also a growing concern over soybean exports. Currently the USDA is projecting a 3.5% increase in soybean exports over…