Technically Speaking Blog

Soybean Extremes May Be Difficult to Defend

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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On Jan. 29, 2024, DTN's National Soybean Index fell below the 2021 low of $11.46 a bushel and stayed below the old low for over a month. July soybean prices in China increased nearly 10% from the February low to the end of March, a strong response to increased buying at soybeans' lower prices (DTN ProphetX chart).
DTN NATIONAL SOYBEAN INDEX:

DTN's national index of cash soybean prices has been trending lower since reaching a high of $13.30 in mid-November, a downhill slide that started with a return of beneficial rains to Brazil after Thanksgiving followed by more over the New Year's weekend. Those cash prices reached a low of $10.79 on Feb. 27 before turning higher in March, ending the month at $11.34 a bushel. Along the way down, prices took out the 2021 low of $11.46 a bushel but have since returned near the old breakout. Because production costs have risen the past few years, the $10.79 low in late February is the equivalent of $8.24 a bushel in pre-COVID terms, a fundamentally cheap price for soybeans, especially when you consider USDA is estimating an 8% ending stocks-to-use ratio for 2023-24.

Technically speaking, the trend remains down for DTN's soybean index, but the rebound in March is encouraging for cash U.S. soybean prices, the possible start of a rejection of an extremely cheap price level. It is also encouraging to see the price of July soybeans in China rebound nearly 10% from its February low in March and settle Monday at the U.S. equivalent of $14.42 a bushel. Sustained closes in the DTN index above the March high of $11.55, if they happen, would be technically bullish signs for soybean prices as the uncertainty of a new planting season gets underway.

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The 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.

Todd Hultman