Slow Plantings, China in Focus for Beans
?? Fundamentals
Soybean futures have been strong in recent sessions, buoyed by strong Chinese demand and weather conditions in South America. South American plantings are behind last year’s pace. In Brazil, 74% of the crop was in the ground, versus 81% last year. Argentina’s crop is 10% behind last year’s pace, with 37% of plantings done, versus 47% last year.
While showing is behind pace, near-term weather conditions across much of the South American growing region have improved. This could limit the upside of the Bean market in the near-term. Chinese demand has been solid and a key driver of the market. Some traders may want to keep an eye on export sales figures to see if the trend continues.
?? Technical Notes
Turning to the chart, we see the January Soybean contract bouncing off support at the 1385 level. In addition to testing support at 1385, the RSI was indicating technical conditions were oversold. Beans have not really been tested since bouncing, meaning that no meaningful resistance level or moving average has been tested.
The RSI is still showing oversold conditions, which suggests the market may favor the bulls in the near-term. Prices are approaching the 20-day moving average. If prices manage to trade above the average, the market could capture additional upside momentum in the near-term. Longer-term, the bias favors the bear camp, as a head-and-shoulders top was recently confirmed. However, a strong near-term up-move could invalidate the pattern.
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