Calm Before The Storm For Soybean Prices?
Today’s Spotlight Market
Here are some of the highlights for Soybeans from the USDA January Crop Report:
2014 U.S. Soybean Production 3.969 billion bu. vs. 2013 production 3,358 billion bu.
2014 U.S. Soybean Average Yield 47.8 bu. per acre vs. 2013 Average Yield 44.0 bu per acre
2014-15 U.S. Soybean Stockpiles 410 million bu. vs. 2013-14 Stockpiles 92 million bu.
Fundamentals
There has been little excitement in the Soybean futures market since November, as prices have remained rangebound the past few months. However, Monday?s release of the USDA?s January Crop report could finally be the catalyst for some market movement in the coming weeks. The biggest surprise for analysts in Monday?s report was the size of world Soybean ending stocks, which were estimated at a record 90.78 million tons! This was well over 1 million tons above pre-report estimates and over 20 million tons ahead of the previous record. In addition, it appears that South America will once again produce a bumper Soybean crop this season, which could add pressure to old-crop months when the harvest begins in the coming weeks.
With the world apparently awash in Soybeans, one would think that new-crop Soybeans would need to see a sharp price decline to persuade U.S. producers to shift acreage to other crops this spring. However, looking at the November 2015 futures, we see prices hovering just under $10 per bushel, which is a rather lofty price given the global supply of Soybeans. While it appears that traders expect Soybean demand to remain robust, especially from China, it may be difficult for Soybean prices to stage any significant rally in the near-term unless it appears that U.S. Soybean acreage would be curtailed, or if adverse weather significantly affects the South American harvest.
Technical Notes? -? View Today’s Chart
Looking at the daily chart for March Soybean futures, we notice prices remain in a consolidation phase, as prices have hovered within an approximately $1 per bushel range since November. Prices are currently near the lower end of the recent range, hovering just above 10 dollars per bushel as of this writing. The price sell-off following Monday?s USDA report has sent prices below the 20-day moving average, which gives short-term momentum bears the upper hand. The 14-day RSI has tuned lower from more neutral levels, with a current reading of 42.72. Support is seen at the low of the recent consolidation phase at 991.00, with resistance found at the November high of 1089.75.
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