Soybean Prices Rally Despite ?Bearish? USDA Report
Fundamentals
Despite slightly higher estimates for both inventories and planted acreage, Soybean prices continue to move higher as strong export demand remains the focus of the trade. Monday?s USDA quarterly grain stocks and prospective plantings report was initially viewed as neutral to bearish for Soybeans according to analysts. Old-crop Soybean inventories as of March 1st totaled 992 million bushels, which was slightly higher than pre-report estimates, but below the 998 million bushels in storage this time last year. U.S. producers are expected to plant record acreage to Soybeans this year, with the USDA estimating that nearly 81.5 million acres of Soybeans will be planted vs. 76.5 million acres last year. However, U.S. Soybean exports continue to run stronger than expected, especially with the South American harvest under way. It is surprising that the U.S. has not lost much business to Brazil and Argentina as of yet and this continued demand for old-crop soybeans is being reflected in a strengthening of the old-crop/new-crop spreads.
Technical Notes? -? View Today’s Chart
Looking at the daily chart for May Soybeans, we notice prices breaking out to the upside following nearly a month of price consolidation between 1365.00 and 1460.00. Trading volume was muted during the consolidation phase, but failed to increase in a meaningful way during the recent upside price breakout. The 14-day RSI has moved back into overbought territory with a current reading of 71.63. More importantly, we also have a bearish divergence forming in the RSI, which combined with low to moderate trading volume could be harbinger of an upcoming downward price correction. The next resistance level is seen at 1500.00 with support seen at the March 12th low of 1365.50.?
——————————————————————————————————–
Disclaimers
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control.
Derivatives involve substantial risk and are not appropriate for all investors. Please read the?“Disclosure Statement for Futures and Options”?prior to investing in futures or options.
For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and?other risks?apply.