Soybean Analysis - Jan. 20
Price action: March soybeans soared 34 1/2 cents to $14.25 3/4, the contract’s highest closing price since $14.33 on June 10, while November soybeans rose 15 3/4 cents to $13.20 1/4 after posting a contract high at $13.25. March soybean meal rose $2.50 to $400.80. March soybean oil jumped 212 points to 62.88 cents, a three-month closing high.
Fundamental analysis: Soybean futures extended yesterday’s rally and closed at a seven-month high on technical strength, concern over dryness in South America and export optimism. Soyoil futures surged in the wake of a record close in Malaysian palm oil prices. Hot, dry conditions persisted from northern Argentina through Paraguay and neighboring areas of southern Brazil, with highs of 100 to 108 degrees Fahrenheit from northwestern Rio Grande do Sul through all of Paraguay. Little rain of significance is expected in Paraguay and far southern Brazil through Saturday, World Weather Inc. said. “Crop stress will increase as moisture from recent rain is lost to evaporation while areas that missed out on rain see further declines in yields,” the forecaster said.
China’s soybean imports in December from the U.S. almost doubled compared to November as more cargoes arrived after delays due to Hurricane Ida. China imported 6.09 MMT U.S. soybeans in December, up 68% from 3.63 MMT in November and up 4.0% from December 2020, according to customs data. USDA tomorrow is expected to report weekly net U.S. soybean export sales ranging from 600,000 MT to 1.2 MMT for the 2021-22 marketing year and net sales of 100,000 to 300,000 MT for 2022-23.
Technical analysis: The soybean bulls have a solid near-term technical advantage and gained more power today, with prices in a 10-week uptrend. The next near-term upside objective for bulls is closing March futures above solid resistance at the contract high of $14.45 1/2. The next downside price objective for bears is closing prices below solid support at this week’s low of $13.49 3/4. First resistance is seen at today’s high of $14.29 1/2, then at $13.49 3/4. First support is seen at $14.00, then at today’s low of $13.87 1/2.
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