Canada Markets

Sellers remain in control in the soybean market, with the Jan. 2 trade showing a bearish gap lower while breaching both trendline and retracement support.

Today's move shows the March contract losing 24 1/2 cents to close at $12.73 1/2 per bushel (bu), the largest one-day drop on this chart since Nov. 16. The move saw the price drop below the blue line, drawn from the contract's June 28 low.

The move also resulted in a drop below the horizontal green line at $12.86 3/4/bu, the 50% retracement of the move from the contract's May 31 low to the July 24 high. A sustained move below this support could lead to a test of the 61.8% retracement at $12.53 1/4/bu, while a weekly low is seen at $12.62 1/4/bu. Psychological support may also be seen at $12.50/bu.

The two lower studies seem to show commercial traders at odds with noncommercial traders. As seen on the histogram bars on the lower study, noncommercial traders moved from a bearish net-short futures position of 11,926 contracts net-short as of Dec. 26, the first bearish position reported by the CFTC since February 2020. Noncommercial activity continues to dominate market direction, with the March contract closing lower in each of the past three sessions for a loss of 47 cents.

The brown line on the third study shows the March/May futures spread narrowing or strengthening to minus 7 1/2 cents, after strengthening 1 3/4 cents this session. This is the narrowest spread since Sept. 22, or more than three months, signaling front-end demand, which bears watching. This spread reached a low of minus 16 cents in early December.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com.

Follow him on X, formerly known as Twitter, @CliffJamieson.

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