Soybean Analysis - Jan. 26
Price action: Soybean futures led the soy complex higher, with nearby March bean futures surging 32 3/4 cents to $14.40, the highest in the contract’s lifetime. March soyoil climbed 142 points to 63.93 cents per pound, while March soymeal advanced $8.50 to $400.50 per ton.
Fundamental analysis: Smaller soybean crops in South America likely will push export business to the U.S. from June onwards, Reuters reported, citing Oil World. The oilseed analyst estimates the combined 2021-22 soybean harvest in Brazil, Argentina, Paraguay and Uruguay will fall to about 186.3 MMT, down 7.4 MMT from the last season and a four-year low. Oil World forecasts Brazil’s soybean crop will fall to about 135 MT from 138.5 MT last year and Argentina’s crop at around 42 MMT, down 1.8 MMT. News that a U.S. advisory firm had trimmed its U.S. soybean plantings for 2022 by about one million acres, to 87.8 million, probably played a role in the across-the-board surge as well.
Equity market strength also supported commodity markets, which were led by a rally in Brent crude oil, the global benchmark, above $90 a barrel for the first time since 2014. Malaysian palm oil also rose.
Technical analysis: Bulls hold a technical advantage in soybeans, with March futures coming within two cents of the contract high of $14.45 1/2. Resistance is seen at today’s high of $14.43 3/4. The continuation chart implies additional resistance around $14.66 and $14.80. A push above those levels would have bulls targeting $15.00. Look for initial support around $14.00, then at today’s low of $13.93 3/4. A drop below that level would have bears looking to test the 40-day moving average near $13.35.
March soyoil futures posted fresh short-term highs, clearly indicating bulls are in command of the short-term technical situation. Still, they may face significant resistance at 64.00 cents and the tcontract high of 64.68 cents. Look for additional resistance around 65.00, with a move above that level likely having bulls targeting the July continuation chart high at 69.18. Initial support at Monday’s low of 61.22 cents will likely be backed by the 10-day moving average near 61.04 cents, but a drop below those levels would have bears looking to challenge the Jan. 14 low of 57.60 cents, then the 40-day moving average at 57.26 cents.
Today’s rebound in March soymeal carried it back above the psychologically important $400.00 level, opening the door to a test of resistance around $415.00. The contract high marks resistance at $431.80. Support at Monday’s low of $3387.40 coincides roughly with the 40-day moving average near $388.10. Also, the extended trendline drawn across the contract’s fall lows places support near $385.70. Additional support is likely to emerge around $368.40, but a drop below that level would have bears targeting $350.00.
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