Technically Speaking

There was a lot going on in the soybean market the week ended May 17, 2024. Late Monday, USDA said 35% of the soybean crop was planted, slightly ahead of its normal pace, even though storms and wet weather have slowed the planting pace and more rain is expected the next two weeks. On Tuesday, the U.S. announced a new round of tariffs on Chinese goods, designed to protect domestic supplies, important to the U.S. The Chinese government protested and promised to retaliate, but so far, no action has been taken against China's imports of U.S. soybeans. July soybeans were down a nickel on Tuesday, the day of the announcement, but finished the week up 9 cents at $12.28, above both its 20- and 100-day averages.

Also last week, rain continued to fall in Rio Grande do Sul, a state in southern Brazil where flooding is being described in the media as the worst in 80 years. The International Grains Council reported Emater, the state's extension service, said the soybean harvest advanced from 78% to 85% in the latest week, but also noted a "sharp deterioration in grain quality." The flooding has caused power outages, numerous infrastructure problems, including damaged roads and ruined silos. Traffic has been limited at the Rio Grande port authority and soybean crush operations have been disrupted.

Technically speaking, July soybeans turned up from a downtrend earlier this year and appear to be in the early stages of a new uptrend, supported by a higher low in April. Even more impressive, July soybean prices on China's Dalian exchange have been trending higher since making a low in February and ended the week near their highest prices in five months, at the U.S. equivalent of $14.96 a bushel. With soybean demand looking strong in China and cash soybean prices rising in Brazil, the Chinese government may be reluctant to limit imports of U.S. soybeans, to their own detriment.

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Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, futures or options involve substantial risk and are not suitable for everyone.

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

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