Technically Speaking

Possible Support for Soy Complex

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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In spite of a bearish market environment, the weekly chart of November 2020 soybeans shows prices have not yet been able to reach the one-year low of $8.15 1/2. The weekly stochastic indicator is close to turning higher, but has not turned bullish yet (DTN ProphetX chart).

November 2020 Soybeans:

November soybeans closed up 13 1/2 cents at $8.55 for the week ended May 1, a decent gain for a market still concerned about the impact of meat plant closures on this year's feed demand. The year 2020 has not been kind to November soybeans as prices are already down over $1.20 a bushel. As bearish as the rapid spread of the coronavirus has been to the economy and soybean prices, it is interesting that November soybeans rejected a recent test of the contract low on April 21 and have not yet reached their one-year low of $8.15 1/2. Here at the lower end of the one-year range is a good place to watch for support and the weekly stochastic is close, but has not yet confirmed a bullish change in momentum.

December 2020 Soybean Meal:

December soybean meal ended up $1.70 at $297.00 in the week ended May 1. As mentioned above, lower feed demand is a concern in 2020 as restricted meat plants are forcing reductions in livestock inventory, mainly pork and poultry. On the other hand, Argentina, the world's largest exporter of soybean meal, increased export taxes on soybeans and products earlier in 2020 to help compensate for an economy in crisis. Argentina's soybean crop is over two-thirds harvested and will be a little smaller this year, probably under 50.0 million metric tons (mmt) (1.84 billion bushels). On a weekly chart, December meal is trading near its lowest prices in four years and is showing signs of finding support. Like soybeans, the weekly stochastic is close to turning higher, but has not confirmed a bullish change in momentum yet.

December 2020 Soybean Oil:

December soybean oil closed up 0.96 cent at $27.36 for the week ended May 1, having survived Monday's test of the contract low. The recent low in bean oil was also among the lowest December prices of the past 13 years, a good area to find possible long-term support. Both, soybean oil and palm oil prices are encountering pressure from excess crude oil supplies, an issue that is also related to measures intended to slow the spread of the coronavirus. Even so, the sharp drop in prices on the weekly chart for December soybean oil appears to be losing momentum. Similar to soybeans and meal, the weekly stochastic indicator has not yet confirmed a turn higher.

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of grains and grain futures involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Follow him on Twitter @ToddHultman

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