Price action: July soybeans rose 26 1/2 cents to $13.99 1/4, finishing the session above the 40-day moving average for the first time in nearly two months and marking the highest close since May 15.
Fundamental analysis: The soy complex edged higher, led by a surge in soybean futures amid a second week of lower-than-expected government ratings and supportive outside markets. USDA’s rating of the soy crop as of Sunday was 59% “good” to “excellent,” which was down 3% from the previous week and a percentage point below pre-report estimates. When USDA’s ratings are plugged into the weighted Pro Farmer Crop Condition Index, (CCI; 0-to-500-point scale, with 500 representing perfect), the soybean crop dropped 7.3 points on the week to 350.6 and is 20.4 points below a year-ago. Crop consultant, Dr. Michael Cordonnier lowered his U.S. soybean yield by 0.5 bu. this week to 51.5 bu. per acre and noted a neutral to lower bias going forward as 39% of U.S. soybean acreage is in drought. Cordonnier stated germination, plant population and emergence could be impacted in drier areas but could recuperate if the weather improves in late July and August.
World Weather Inc. reports no excessive heat is likely in the Midwest, although the region will trend a little warmer later this week and stay seasonably warm into next week. The forecaster notes precip remains limited for many areas in the coming week.
Technical analysis: July soybeans rallied to their highest level in a month, gaining technical traction with a close above the 40-day moving average of $13.84 3/4 for the first time since April 19 as well as former resistance at $13.87 1/2. A close above resistance at $14.02 1/4 will be the next objective for bulls, with a close above the $14.00 area likely intensifying buying efforts towards $14.11 3/4 and the 100-day moving average of $14.46 1/4. From there, the April 19-20 gap from $14.78 3/4 to $14.76 1/2 will likely serve as the next upside target. Failure to breach $14.00 will likely see bear efforts resume in earnest, though a move lower will continue to find support initially at $13.63 1/4, then at the 10- and 20-day moving averages of $13.56 3/4 and $13.42 3/4, respectively. A breach of these levels will find bears then working towards the May 31 low of $12.99 3/4.
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