Technically Speaking

Since the 56 1/4-cent-tariff-induced rout in July soybean futures from April 2 through April 4, the July contract has responded with an impressive rally backed by noncommercial buyers, which at the time of this writing has sent prices back up 56 1/2 cents. Prices have now consolidated over the past week and a half between support and multiple layers of chart resistance that stand between current prices and a challenge of the early 2025 highs.

The first notable technical feature of the July soybean market is the apparent bull flag pattern that has emerged. To clarify, a bull flag pattern features a strong move higher in prices (the flagpole, April 7-11), followed by a period of rangebound trade (the flag, April 14-present), before a breakout of upside resistance would signal a continuation of the recent rally. The building of open interest in July soybean futures over the past week could suggest bullish soybean traders are buying up contracts on each test of immediate support near and below $10.40.

There appear to be two fronts of resistance to the breakout and continuation of the soybean rally, the first being psychological pressure at $10.50. In my opinion, seeing that the July contract has broken through this level already in 2025 and spent several weeks above this mark, I consider this the softer of the two sources of resistance. The more formidable hurdle for soybean prices will be the 200-day moving average for July futures. For the past eight sessions, the contract has traded to and subsequently been denied at this level in seven of the sessions. In fact, the July soybean contract has closed above this mark just three times since the start of 2024, almost a year and a half ago. The board posted two closes above in early February in what turned out to be the high of the year for July soybean futures, at least thus far.

As I write this for the current session, July soybeans again traded as much as 7 cents above the 200-day moving average, which now sits at $10.50 3/4, before sellers stepped in. Currently, prices are again challenging the level. If the current session can hold above $10.50 3/4, it would certainly be a step in the right direction of a seasonal rally for old-crop soybean prices. I will leave off with this; in looking back at the DTN National Soybean Index since 1997, the cash index has hit its calendar-year high in February just once. May through August still hold the highest probability to capture the high -- at least in this study of recent history. With soybean fundamentals growing more friendly, the window to higher prices remains open, with the technical milestone at the 200-day moving average being an immediate goal for bullish traders.

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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.

Rhett Montgomery can be reached at rhett.montgomery@dtn.com

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