Soybeans Setting up for a Breakout?
Nov 07, 2017
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January soybeans have bounced off the mid-term up trend line only to run into the short-term down trend resistance. With a USDA report coming up on Thursday the soybean market is getting pinched between support and resistance. When one gives way there could be a significant amount of technical follow through. But which way?
Since mid August soybeans have been in a shallow mid-term uptrend. Beans have tested this trend support 7 times and bounced 7 times. Of the 7 times beans have bounced off trend 5 of those times it has gone on to make a new recent high. However, lately soybeans have been under some pressure creating a short-term down trend.
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The soybean market spiked higher on the October USDA WASDE report when the USDA forecasted lower than expected yields. Since then however harvest pressure in the US and a weakening Brazilian Real have put soybeans in a short-term down trend. With the two trends coming together a breakout seems likely in the relatively near future.
Which direction may depend on what the USDA says on Thursday. If the USDA lowers yield more than trade expectations soybeans could have good reason to breakout to the upside with a target of $10.30 bu in the Jan contract. On the other hand, if the USDA leaves yield unchanged and/or lowers export demand soybeans could breakout to the down side.
While I do understand the argument for lowering exports I think the USDA will be reluctant to do so given their history of underestimating demand. At the same time our yield expectations have been declining as later harvested soybeans have for the most part not been as good as the early harvested beans. It might be an interesting day on Thursday.
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DecemberCorn Daily chart:
NovemberSoybeans Daily chart:
Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or email@example.com
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